GBP/USD sets the ground for a pivot

GBP/USD selling pressures ease shortly after pullback from 3-year high.
Technical signals favor bullish rotation; break above 1.3620 is needed.

Christina Parthenidou XM

GBP/USD is drawing buyers' interest after briefly dipping below its 20-day simple moving average (SMA) and a week after retreating from the three-year high of 1.3787.

Upside pressures may remain intact as risk-on sentiment in global stock markets tends to fuel appetite for the British pound. Technical indicators also support this narrative: the stochastic oscillator is set for a rebound, and the RSI is attempting to avoid a drop below its neutral 50 mark.

However, traders may remain cautious until the price successfully overcomes the nearby resistance at 1.3620. A decisive close above this level could be the catalyst for an extended move back to the 1.3787 peak and the upper boundary of the bullish channel at 1.3840. Additional increases could then target the 1.3950–1.4070 zone, last seen in June–July 2021.

On the downside, a break below the channel support at 1.3480 – especially if followed by a drop beneath the key 2025 trendline support at 1.3385 – could confirm a bearish continuation toward 1.3245.

In summary, GBP/USD may be poised for another bullish wave, with confirmation coming on a break above 1.3620. Otherwise, attention could turn back to the channel’s lower boundary.

Author

Christina Parthenidou

Christina joined the XM investment research department in May 2017. She holds a master degree in Economics and Business from the Erasmus University Rotterdam with a specialization in International economics.

EUR/USD consolidates weekly gains near 1.1750 after PMI data

EUR/USD trades marginally lower on the day near 1.1750 in the European session on Friday. The data from Germany and the Eurozone showed that the business activity in private sector expanded at a modest pace in January, helping the Euro hold its ground. In the second half of the day, US PMI data will be watched closely.

When are the UK Retail Sales and how could they affect GBP/USD?

The United Kingdom docket has the Retail Sales data for December to be released by the Office for National Statistics (ONS) on Friday, later this session at 07:00 GMT. UK Retail Sales are expected to decline by 0.1% month-over-month in December, following a 0.1% decline seen in November.