Brokers from Risance dive into the latest GBP/USD technical picture, as sterling extends its recovery into a pivotal resistance zone ahead of a heavy week of US and UK economic data.
Pound Extends Recovery Above Key Moving Averages
GBP/USD has extended its rebound to 1.3460 after bouncing off the 1.3280 ascending trend support line. The pair has since moved above both the 50 day EMA at 1.3387 and the 100 day EMA at 1.3378, a combination that signals building bullish momentum in the near term.
Despite this constructive setup, the 1.3500 level, home to a long term descending trend line, stands out as a significant resistance point. This zone has previously rejected buyers on multiple occasions, making a decisive close above it particularly meaningful for confirming a broader shift in trend. Should the pair clear 1.3500 convincingly, the descending range would effectively be eliminated, exposing 1.3550 as the next logical target.
UOB Flags 1.3555 As The Next Major Test
According to Quek Ser Leang of United Overseas Bank, sterling traded in a notably volatile fashion last Friday, dropping to a low of 1.3401 before surging to close at 1.3481. While the sharp rise carries scope to extend further, overbought conditions may limit near term gains to a test of 1.3520, with the major resistance at 1.3555 unlikely to come into view within the 24 hour timeframe.
On support, UOB places the immediate floor at 1.3450, noting that a breach of 1.3425 would suggest the current upward pressure has begun to ease. Looking further out, over a 1 to 3 week horizon, the pound broke above the significant 1.3400 resistance last week and climbed as high as 1.3494.
While momentum remains strong, whether GBP/USD can break and hold above 1.3555 remains an open question, with sterling needing to defend the 1.3385 strong support zone to sustain the current momentum.
NFP Week Raises The Stakes For The Dollar
This week’s US economic calendar carries outsized importance for currency markets, with Friday’s Non-Farm Payrolls report standing as the single most consequential release ahead of the September FOMC meeting. The Federal Reserve’s decision last week to hold rates at 3.50% to 3.75% reaffirmed the data dependent stance of the current Fed chair, pushing markets to scrutinize labor data even more closely than usual.
Beyond payrolls, traders will also be parsing JOLTS job openings, ADP employment figures, the ISM Services PMI, and initial jobless claims for further clues about the economy’s underlying strength.
With inflation having eased closer to the Fed’s 2% target, labor market resilience has become the central variable shaping expectations for the September policy decision, and recent volatility in the Treasury market suggests investors are already pricing in the possibility of a delayed rate move should the data come in strong.
Euro And Broader Dollar Dynamics Add Context
The euro, for its part, continues to draw support from the European Central Bank’s decision to hold its deposit rate at 2.25%, with policymakers maintaining a meeting by meeting approach. This week’s Eurozone data, including retail sales, German factory orders, and the final services PMI, will offer further insight into whether domestic demand is stabilizing after a soft first half of the year.
Meanwhile, the Bank of England’s decision to hold rates at 3.75%, paired with policymaker comments suggesting inflation risks remain present, continues to shape sterling’s own trajectory.
Investors are focusing closely on the UK Services PMI, along with fresh housing and labor market data, to gauge how the economy is responding to a still restrictive monetary policy stance without tipping into a deeper downturn.
Conclusion
GBP/USD sits at a technically significant juncture, having reclaimed key moving averages while approaching the critical 1.3500 to 1.3555 resistance band. A decisive break above this zone would open the door toward 1.3550 and beyond, while a failure to hold above 1.3385 to 1.3400 would suggest the recent recovery is losing steam.
With Friday’s Non-Farm Payrolls report set to heavily influence dollar sentiment, and both the ECB and Bank of England data adding further texture to the euro and pound outlooks, traders following GBP/USD strategies should treat this week’s price action as a key test of whether sterling’s recovery can evolve into a more sustained trend.