Technical analysis: GBP/USD at top of bullish channel
2025-07-02 19:14:50
GBP/USD has had a weak start to July trading after five straight months of gains that pushed the pair to a three-year high of 1.3787 on Monday.
The pair’s gains have been largely driven by a weaker dollar, while the Bank of England’s gradual rate cuts have also played a positive role. BoE Governor Andrew Bailey reminded investors at a symposium with global peers in Portugal that interest rates are expected to fall further, while suggesting that quantitative tightening could slow, casting a shadow over the outlook for the rest of the year.
At the same time, the relative strength index (RSI) and stochastic indicators issued an overbought warning, and the current price is close to the 2022 high of 1.3747 and the upper track of the bullish channel. The short-lived candlestick at the top of the uptrend also reflects a certain degree of hesitation among traders.
If the bearish pressure emerges, the pair could retreat to the previous resistance area of 1.3615, where the 20-day exponential moving average (EMA) is converging. The 50-day EMA may provide additional support near the lower boundary of the channel at 1.3450, while the rising trendline of 1.3320 and 1.3235 may be the next levels to watch.
If it breaks above 1.3800, the next resistance level may appear around 1.3950, which is derived from the highs of June to August 2021. Further upside, the rally may pause around 1.4070, after which it may target the 2025 resistance level of 1.4180.
Overall, the recent bullish run in GBP/USD seems to have reached a critical turning point, with the likelihood of a pullback or consolidation increasing. Nevertheless, only a break below the 1.3450 channel level would raise concerns about a potential bearish trend reversal.
The pair’s gains have been largely driven by a weaker dollar, while the Bank of England’s gradual rate cuts have also played a positive role. BoE Governor Andrew Bailey reminded investors at a symposium with global peers in Portugal that interest rates are expected to fall further, while suggesting that quantitative tightening could slow, casting a shadow over the outlook for the rest of the year.
At the same time, the relative strength index (RSI) and stochastic indicators issued an overbought warning, and the current price is close to the 2022 high of 1.3747 and the upper track of the bullish channel. The short-lived candlestick at the top of the uptrend also reflects a certain degree of hesitation among traders.
If the bearish pressure emerges, the pair could retreat to the previous resistance area of 1.3615, where the 20-day exponential moving average (EMA) is converging. The 50-day EMA may provide additional support near the lower boundary of the channel at 1.3450, while the rising trendline of 1.3320 and 1.3235 may be the next levels to watch.
If it breaks above 1.3800, the next resistance level may appear around 1.3950, which is derived from the highs of June to August 2021. Further upside, the rally may pause around 1.4070, after which it may target the 2025 resistance level of 1.4180.
Overall, the recent bullish run in GBP/USD seems to have reached a critical turning point, with the likelihood of a pullback or consolidation increasing. Nevertheless, only a break below the 1.3450 channel level would raise concerns about a potential bearish trend reversal.
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