Daily fair value gap supports GBP, incoming new highs ahead

As weakness on the greenback continues to "strengthen" with no signs of sustained or even renewed recovery, Eurozone experiences a boost for upside including GBP/USD.

Dollar's fragile move increases downside risk

Basing on the Daily Timeframe, U.S. Dollar is having a hard time holding support levels and is currently trading below equilibrium of below the 50% of the range which is not giving the Dollar any help or boost for a recovery. As weakness continues, we could see that the greenback could continue to trade below the 99 level, and potentially, reaching the year-to-date lows.

Pound strengthens thanks to Dollar weakness

Daily

The Daily Fair Value Gap resting between 1.34405 - 1.35180 level is acting as a support for Pound to hold its ground.

Four-hour

The 4-hour price action is also exhibiting bullish confirmation that more highs could be anticipated as GBP/USD has already broken out of the immediate resistance.

This move was also support after the pound was supported by the 4-hour Fair Value Gap at 1.34460 - 1.34573 level. As long as the Dollar is in a sustained weakness and GBP/USD continues to exhibit upside strength, we might see pound to remain on an uptrend trajectory.

Incoming red folders

With the incoming red folders, traders must still be on a cautious state as the volatility could either lift GBP/USD or make the British Pound to a pullback.

What to watch out

• Dollar’s continued breakdown: If DXY breaks below the 99.00 mark, expect further downside pressure on the USD, favoring continued upside for EUR/USD and GBP/USD.
• Pound momentum holding: As long as GBP/USD holds above the 4H FVG (1.34460 - 1.34573), the bullish bias remains intact with potential to retest 1.3600+.
• Volatility risk from red folders: Keep a close eye on high-impact U.S. data (ISM, NFP) and ECB guidance, any surprise could spark sharp reversals or accelerate existing moves.