GBP/USD’s bullish streak hits a wall

GBP/USD touches key resistance line near 1.3950.
Overbought conditions emerge after impressive weekly rally.

Christina Parthenidou XM

GBP/USD was trading with softer positive momentum during Tuesday’s early European session, following a surge to a new three-year high of 1.3592 on Monday.

Stronger-than-expected CPI inflation and business PMI figures, combined with a weakening US dollar, triggered a fresh rally last week. However, with the pair now testing a tentative resistance line that connects the highs from July 2023 and September 2024 at 1.3590– after six consecutive winning sessions - a slowdown may be on the horizon. Notably, both the RSI and the stochastic oscillator are approaching overbought territory, increasing the likelihood of a near-term pullback.

If upside momentum fades and the pair retreats below the 1.3520 level, support could emerge near the 1.3420 area or closer to the 20-day simple moving average (SMA), currently positioned at 1.3340. A break below that level could trigger fresh selling pressure, potentially driving the pair down toward 1.3260.

On the upside, a decisive move above the threshold of 1.3590 – and further beyond the 1.3630 zone, where the 161.8% Fibonacci extension of the previous downtrend intersects with the rising trendline from April 2024 and the 2022 resistance region– could open the door to the 2022 peak of 1.3747 and the psychological 1.3800 level, which aligns with the 2025 resistance line. A continued advance could even target the 1.3950–1.4000 zone.

In summary, GBP/USD is currently testing a significant resistance area. With technical indicators signaling overbought conditions, the bullish momentum may pause in the short term.

Author

Christina Parthenidou

Christina joined Trading Point in May 2017. She holds a master degree in Economics and Business from the Erasmus University Rotterdam with a specialization in International economics.

USD/JPY eyes August swing low, near 155.20 ahead of US NFP

USD/JPY retests the August monthly swing low during the Asian session on Friday as a more hawkish repricing of BoJ rate-hike bets and a suspected intervention continue to underpin the Japanese Yen. Meanwhile, the US Dollar is seen consolidating the previous day's heavy losses amid soft US bond yields, further weighing on the currency pair as traders keenly await the US NFP report.

AUD/USD consolidates above 0.7200; US NFP awaited

AUD/USD holds steady above 0.7200, near its highest level since mid-May, as bulls await the US NFP report for more cues on the Fed's policy path before placing fresh bets. Meanwhile, the recent decline in US bond yields keeps the US Dollar depressed near its lowest level in over a week and acts as a tailwind for the Aussie amid the RBA's hawkish tilt.

Gold tumbles as blockbuster US NFP lift US Dollar, Treasury yields

Gold (XAU/USD) falls sharply on Friday, snapping a two-day recovery after the US Nonfarm Payrolls (NFP) report surprised strongly to the upside. The metal briefly climbed above $4,500 on Thursday, gaining nearly 2%, but has since erased a large part of that advance.

Crypto’s $638 million buyback boom may not be as bullish as it looks

Decentralized Finance (DeFi) protocols reportedly spent $638 million to buy back their native tokens in August, up 17% from a year earlier. On the surface, the buyback trend suggests the cryptocurrency industry is maturing fast, adopting one of Wall Street’s oldest tools to bolster valuations and distribute revenue. The headline becomes less impressive once the number is opened up.

Why hawkish Bank of Japan expectations aren't enough to sustain the Japanese Yen rally

The Japanese Yen (JPY) experienced a sudden burst higher after falling back below the 160.00 psychological mark against the US Dollar (USD) earlier this week amid a more hawkish repricing of Bank of Japan (BoJ) rate hike expectations.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.