GBP/USD escapes bearish trap but yet to turn bullish

GBP/USD staged a relief rally towards 1.3479 as the US dollar retreated following President Trump’s comments that the conflict in Iran could end "very soon”. While he later cautioned a more powerful response should Iran interfere with tankers at the Strait of Hormuz, the initial optimism provided the cable with much-needed breathing room.

The pair held a strong footing near the support trendline from January 2025 and climbed above the short-term descending trendline drawn from the January peak, raising hopes that a new bullish phase is underway.

Despite this progress, the pair is not yet out of the woods. The price action remains tightly constrained within a resistance zone between 1.3440 and 1.3480, while also being squeezed between its 20-day and 200-day simple moving averages (SMAs). The 1.3540–1.3570 region represents the next major barrier for buyers; a decisive break above this area is necessary to fully eliminate fears of a broader bearish trend reversal. Should the bulls clear that hurdle, a breakout above the 1.3665 area would be the primary catalyst for a continuation toward the 1.3790 target.

The technical indicators are also indicating that the bulls lack conviction as the RSI has yet to climb above its 50 neutral mark, while the stochastic oscillator is already flirting with overbought levels. Nevertheless, only a decisive close below the 1.3340–1.3355 floor would significantly worsen the outlook, potentially unleashing a sharp sell-off toward 1.3200. If the bears claim the 1.3140 former support area as well, the next stop could be near the November low of 1.3000.

In a nutshell, GBP/USD continues to trade in a caution area. While a close above 1.3480 may activate fresh buying interest, the recovery phase toward previous highs might be complex and fraught with technical friction.