A correction in the US dollar index propelled the pound sterling to rebound against the dollar, awaiting a breakout.
2026-05-06 13:11:05
On Wednesday during Asian trading hours, the pound continued its rebound against the dollar, rising to around 1.3580, moving away from the weekly low of 1.3510. This rise was mainly driven by a weaker dollar and improved market risk sentiment. As signs of easing tensions in the Middle East emerged, demand for safe-haven assets decreased significantly, putting downward pressure on the dollar and providing upward momentum for the pound.
The United States has stated that it will suspend related operations to facilitate a final agreement. The U.S. Department of Defense indicated that the ceasefire remains stable and there is no intention to escalate further.
Rising market expectations for a rapid easing of the conflict boosted investor confidence and drove funds into risk assets, benefiting the pound. This shift also impacted the commodities market, with crude oil prices experiencing another decline.
The decline in oil prices eased market concerns about persistently high inflation, thus reducing the need for further interest rate hikes by the Federal Reserve. This shift in policy expectations became a significant factor suppressing the dollar. Against this backdrop, the dollar generally weakened, providing support for the rise in the pound against the dollar.
On the other hand, policy expectations in the UK are relatively tight. The Bank of England has signaled that raising interest rates remains a possible option if inflation persists. This policy divergence has become a significant factor supporting the pound, making it relatively strong among major currencies.
From a market structure perspective, the current exchange rate rise is driven by multiple factors, including improved risk sentiment, a weaker dollar, and supportive expectations of Bank of England policy. However, short-term trends remain uncertain. The market is closely watching the upcoming US ADP employment data and the subsequent non-farm payroll report, which will have a crucial impact on interest rate expectations.
From a technical perspective, the GBP/USD daily chart shows an upward trend with fluctuations. The exchange rate has rebounded from its lows and regained its position above 1.3550, indicating a recovery in short-term bullish momentum. Current resistance levels to watch are the 1.3600 and 1.3650 area; a break above these levels could lead to a further test of the 1.3700 level. Support levels are located around 1.3520 and 1.3450. The RSI indicator has risen back into neutral-to-bullish territory, and the MACD is gradually forming a golden cross, indicating that upward momentum is strengthening.
On the 4-hour chart, the exchange rate shows an upward structure with consecutive higher lows, and the short-term moving average system is diverging upwards, indicating that the bulls are in control. The price is trading in the upper half of the Bollinger Bands, suggesting a short-term bullish trend. The MACD is above the zero line and continues to expand, while the RSI remains around 60, indicating strong short-term momentum. If the exchange rate breaks through the 1.3600 resistance level, it may move further upwards; if it falls back below 1.3520, it may enter a consolidation phase.
Editor's Summary:
The current movement of the British pound against the US dollar is driven by multiple positive factors, including a weaker dollar, improved risk sentiment, and policy support from the Bank of England. Policy divergence and macroeconomic data will be key to determining its future direction. If US employment data is weak, the exchange rate is expected to continue rising; conversely, a stronger dollar may limit its upside potential. Overall, the short-term trend is bullish, but volatility is expected to increase.
The United States has stated that it will suspend related operations to facilitate a final agreement. The U.S. Department of Defense indicated that the ceasefire remains stable and there is no intention to escalate further.
Rising market expectations for a rapid easing of the conflict boosted investor confidence and drove funds into risk assets, benefiting the pound. This shift also impacted the commodities market, with crude oil prices experiencing another decline.
The decline in oil prices eased market concerns about persistently high inflation, thus reducing the need for further interest rate hikes by the Federal Reserve. This shift in policy expectations became a significant factor suppressing the dollar. Against this backdrop, the dollar generally weakened, providing support for the rise in the pound against the dollar.
On the other hand, policy expectations in the UK are relatively tight. The Bank of England has signaled that raising interest rates remains a possible option if inflation persists. This policy divergence has become a significant factor supporting the pound, making it relatively strong among major currencies.
From a market structure perspective, the current exchange rate rise is driven by multiple factors, including improved risk sentiment, a weaker dollar, and supportive expectations of Bank of England policy. However, short-term trends remain uncertain. The market is closely watching the upcoming US ADP employment data and the subsequent non-farm payroll report, which will have a crucial impact on interest rate expectations.
From a technical perspective, the GBP/USD daily chart shows an upward trend with fluctuations. The exchange rate has rebounded from its lows and regained its position above 1.3550, indicating a recovery in short-term bullish momentum. Current resistance levels to watch are the 1.3600 and 1.3650 area; a break above these levels could lead to a further test of the 1.3700 level. Support levels are located around 1.3520 and 1.3450. The RSI indicator has risen back into neutral-to-bullish territory, and the MACD is gradually forming a golden cross, indicating that upward momentum is strengthening.
On the 4-hour chart, the exchange rate shows an upward structure with consecutive higher lows, and the short-term moving average system is diverging upwards, indicating that the bulls are in control. The price is trading in the upper half of the Bollinger Bands, suggesting a short-term bullish trend. The MACD is above the zero line and continues to expand, while the RSI remains around 60, indicating strong short-term momentum. If the exchange rate breaks through the 1.3600 resistance level, it may move further upwards; if it falls back below 1.3520, it may enter a consolidation phase.
Editor's Summary:
The current movement of the British pound against the US dollar is driven by multiple positive factors, including a weaker dollar, improved risk sentiment, and policy support from the Bank of England. Policy divergence and macroeconomic data will be key to determining its future direction. If US employment data is weak, the exchange rate is expected to continue rising; conversely, a stronger dollar may limit its upside potential. Overall, the short-term trend is bullish, but volatility is expected to increase.
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