GBP/USD moved higher during Wednesday’s European session as a softer US dollar combined with improving demand for sterling. The pair approached the 1.3450 region, extending a recovery that has gathered pace since the end of June.
Brokers from Fondesia.com assess whether GBP/USD can continue toward higher resistance or whether the recent advance is becoming vulnerable to consolidation. Sterling rose by around 0.4% to $1.3442, while also reaching a one-year high against the euro.
Technical Structure Remains Constructive
GBP/USD has formed a sequence of higher short-term lows, creating a more positive chart structure. The pair has recovered by more than 2% from its late-June trough, showing a clear improvement in momentum.
The nine-day Exponential Moving Average may now act as the first layer of support. If price continues to close above this indicator, buyers could remain in control of the immediate trend.
The 20-day EMA is also important. A bullish alignment, with the nine-day EMA above the 20-day EMA, would support the possibility of further gains.
However, GBP/USD is approaching an area where previous advances have struggled. Price action around 1.3450 and 1.3500 will determine whether the recovery extends or pauses.
Image 1: GBP/USD Daily Chart With the 9-Day and 20-Day EMAs, Support at 1.3350 and Resistance at 1.3450
RSI Reflects Stronger Buying Pressure
The 14-day Relative Strength Index has moved above the neutral 50 mark as sterling strengthened. This suggests that bullish momentum is improving.
An RSI reading between 55 and 65 would support continued gains without showing that the pair is excessively stretched. A move above 70 would place GBP/USD in overbought territory and increase the risk of short-term profit-taking.
A stronger bullish signal would involve GBP/USD breaking above 1.3450 while RSI also records a fresh high. If price advances but RSI does not confirm the move, bearish divergence could warn that momentum is fading.
Resistance at 1.3450 and 1.3500
The immediate barrier is located around 1.3450. Sterling traded close to this level during Wednesday’s move, making it the first major test for buyers.
A daily close above 1.3450 could encourage a move toward 1.3500, a major psychological resistance level. Round numbers often attract additional orders and can create more volatile price action.
If GBP/USD clears 1.3500, the next upside area may appear around 1.3560 to 1.3600. Reaching 1.3600 would probably require continued dollar weakness or another supportive UK catalyst.
The main resistance levels are 1.3450, 1.3500, 1.3560, and 1.3600.
Important Support Zones
The first support level is positioned near 1.3400. This round number could attract buyers if the pair experiences a limited pullback.
Below 1.3400, attention would shift toward 1.3350, which may align with a recent consolidation area and a rising short-term moving average.
Further weakness could expose 1.3300. A sustained break below this region would weaken the sequence of higher lows and move the near-term outlook closer to neutral.
Image 2: GBP/USD Four-Hour Chart With RSI, Resistance at 1.3450 and 1.3500, and Support at 1.3400 and 1.3350
Softer Inflation Weighs on the Dollar
The US dollar weakened after producer prices declined 0.3% in June, compared with forecasts for an unchanged monthly reading. The release followed softer consumer inflation and reduced expectations of an immediate rate increase.
A less aggressive rate outlook can weaken the dollar because it narrows the expected yield advantage of US assets. This has supported several major currencies, including sterling.
However, dollar weakness may not continue without interruption. Higher oil prices could renew inflation pressure and encourage policymakers to keep rates elevated for longer.
UK Expectations Support Sterling
Sterling has also benefited from domestic factors. Investors responded positively to expectations of a relatively cautious UK fiscal approach.
The pound has received additional support from resilient economic activity, higher rate expectations, and strong inbound merger and acquisition flows. Markets currently anticipate at least one UK rate increase by November, with another potentially priced for April 2027.
These expectations may keep sterling supported, although political and fiscal developments could still create sudden volatility.
Trading Implications
GBP/USD maintains a bullish short-term bias while trading above 1.3350 to 1.3400.
A confirmed break above 1.3450 could expose 1.3500, followed by 1.3560 and 1.3600. RSI confirmation would make the breakout more convincing.
A rejection from 1.3450, particularly alongside bearish divergence, could lead to consolidation toward 1.3400 or 1.3350.
Conclusion
GBP/USD has strengthened toward 1.3450 as a softer dollar combines with improved demand for sterling.
Resistance is located at 1.3450, 1.3500, 1.3560, and 1.3600. Support remains positioned around 1.3400, 1.3350, and 1.3300.
The technical outlook remains constructive while the pair holds above its short-term moving averages. The reaction near 1.3450 and 1.3500 will determine whether sterling extends its rally or enters a period of consolidation.