GBP/USD Poised for Potential Reversal After Holding 1.3200

The GBP/USD currency pair is approaching a critical juncture after successfully maintaining the 1.3200 support level. While the EUR/USD pair typically moves in tandem with GBP/USD, the latter is showing signs of a potential reversal instead of declining to new lows.

From a fundamental perspective, the US Dollar’s outlook has weakened following recent economic data. The CME FedWatch tool now indicates only one rate hike is expected by December 2026, down from earlier expectations of two hikes. However, strong US GDP revisions and record-high tech stock performance still suggest underlying Dollar strength. Meanwhile, the British Pound faces mixed influences, with UK inflation supporting higher interest rates but slower wage growth and falling job vacancies complicating the case for rate hikes.

Technically, the GBP/USD pair has shown a bullish double bottom near 1.3183 and 1.3193, with a potential bullish square root pattern forming near 1.3200. The pair has been consolidating between 1.3150 and 1.3650 for nearly a year and a half, making a bullish reversal in this area significant. The Pound’s relative weakness compared to the Euro also adds to the bullish outlook.

Traders are advised to watch for a strong bullish close near the top of the day’s range and above 1.3250 to consider a long position. Resistance levels to monitor include 1.3250, 1.3273, and 1.3294. Cautious traders may wait for a decisive break above 1.3250 before entering a long trade.