Is the pound's rebound an illusion? Technicals show that the short structure has not been broken
2025-07-18 20:29:21
On Friday (July 18), GBP/USD rebounded to around 1.3460 before the U.S. market, slightly higher than the previous low, but the overall trend remained within the consolidation range.
UK labor market data has recently put pressure on the pound. According to the UK Office for National Statistics (ONS), the ILO unemployment rate rose to 4.7%, the highest level since July 2021. Although the number of layoffs in the same period was revised down to 25,000, slightly better than expected, there are clear signs of cooling in the overall job market. At the same time, the UK CPI in June was higher than market expectations, increasing the policy dilemma of the Bank of England (BoE).
As for the US dollar, the recent strength has slowed down. Fed Governor Waller recently said that interest rates should be cut by 25 basis points in July, although the market is still betting on the Fed's subsequent policy path. US retail sales and employment data are solid, but inflation expectations continue to rise due to tariff issues, and market sentiment has become cautious.
In the UK, the weakness of the labor market is gradually emerging. The unemployment rate is rising, the wage growth rate is slowing down, and the social security burden faced by enterprises is increasing, which has led the market to be reserved about the UK economic outlook.
At the same time, the UK's June CPI data exceeded expectations, reflecting that inflationary pressure is still accumulating. The market expects that although the Bank of England has room to relax its policy, high inflation makes the monetary policy path more complicated.
As for the US dollar, the recent upward momentum has eased slightly. The dovish stance of Fed Governor Waller has reduced the market's expectations for rate hikes in the short term, but in the medium and long term, there is still uncertainty as to whether the Fed will truly relax its policy. In addition, the US government's continued criticism of the Fed chairman and the uncertainty of tariff policies have also affected the trend of the US dollar to a certain extent.
Market concerns about US inflation are intensifying. The New York Fed predicts that tariffs could push up US inflation by 1 percentage point in the next year, further restricting the Fed's policy space.
Judging from the 4-hour candlestick chart of GBP/USD, the exchange rate has been running in a downward channel since the beginning of July, maintaining an overall bearish market structure.
The previous high of 1.3788 formed the stage top, and then the exchange rate continued to decline along the downward channel, reaching a minimum of 1.3364, forming a local arc bottom pattern. The current exchange rate rebounded from the low point, and the short-term resistance level is at the upper track of the Bollinger band (1.3473).
Judging from the MACD indicator, the DIFF line and the DEA line are still below the zero axis, indicating that the current rebound is a technical rebound and no effective reversal has yet formed.
The RSI indicator is 54.71, which has entered the neutral to strong range, but is far from the overbought level, indicating that the exchange rate may still fluctuate in the short term.
Important support levels: 1.3400, 1.3364
Important resistance levels: 1.3473 (upper Bollinger band), 1.3500
Overall, the analysis shows that the pound is currently in a staged rebound, but the main trend is still bearish. Unless it can effectively break through 1.3500, the market is expected to rebound at a larger level, otherwise there is still a risk of a decline.
Judging from the current market sentiment, the bullish sentiment of the pound has warmed up, but the overall market is still cautious. The disagreement among Fed officials has caused the market to doubt the short-term trend of the US dollar, and some short covering has pushed up the short-term rebound of the pound.
However, due to the weak fundamentals of the UK economy, the market remains pessimistic about the long-term trend of the pound, the bearish market sentiment has not fundamentally changed, and the market's confidence in the pound remains weak.
Short-term outlook:
Analysts believe that if the exchange rate is blocked in the 1.3460-1.3473 range, it may test the 1.3400 support again in the short term, or even fall back to 1.3364;
If it successfully breaks through 1.3473, it is expected to rise to the retracement position of the previous low of 1.3562 in the short term, but it is necessary to pay attention to whether the market trading volume can be effectively expanded.
Mid- to long-term outlook:
From a macro-cycle perspective, the overall structure of GBP/USD is still in a downward trend channel, dominated by the bear market. The fundamentals are still weak, and the slowdown in UK economic growth coupled with inflationary pressure complicates the policy game;
If the US tariffs are officially implemented in August, the market risk aversion may further push up the dollar and the pound will face a new round of pressure. However, if the Fed actually starts to cut interest rates, the dollar rebound may temporarily peak, and the pound is expected to usher in a technical rebound.
UK labor market data has recently put pressure on the pound. According to the UK Office for National Statistics (ONS), the ILO unemployment rate rose to 4.7%, the highest level since July 2021. Although the number of layoffs in the same period was revised down to 25,000, slightly better than expected, there are clear signs of cooling in the overall job market. At the same time, the UK CPI in June was higher than market expectations, increasing the policy dilemma of the Bank of England (BoE).
As for the US dollar, the recent strength has slowed down. Fed Governor Waller recently said that interest rates should be cut by 25 basis points in July, although the market is still betting on the Fed's subsequent policy path. US retail sales and employment data are solid, but inflation expectations continue to rise due to tariff issues, and market sentiment has become cautious.
Fundamentals
In the UK, the weakness of the labor market is gradually emerging. The unemployment rate is rising, the wage growth rate is slowing down, and the social security burden faced by enterprises is increasing, which has led the market to be reserved about the UK economic outlook.
At the same time, the UK's June CPI data exceeded expectations, reflecting that inflationary pressure is still accumulating. The market expects that although the Bank of England has room to relax its policy, high inflation makes the monetary policy path more complicated.
As for the US dollar, the recent upward momentum has eased slightly. The dovish stance of Fed Governor Waller has reduced the market's expectations for rate hikes in the short term, but in the medium and long term, there is still uncertainty as to whether the Fed will truly relax its policy. In addition, the US government's continued criticism of the Fed chairman and the uncertainty of tariff policies have also affected the trend of the US dollar to a certain extent.
Market concerns about US inflation are intensifying. The New York Fed predicts that tariffs could push up US inflation by 1 percentage point in the next year, further restricting the Fed's policy space.
Technical aspects:
Judging from the 4-hour candlestick chart of GBP/USD, the exchange rate has been running in a downward channel since the beginning of July, maintaining an overall bearish market structure.
The previous high of 1.3788 formed the stage top, and then the exchange rate continued to decline along the downward channel, reaching a minimum of 1.3364, forming a local arc bottom pattern. The current exchange rate rebounded from the low point, and the short-term resistance level is at the upper track of the Bollinger band (1.3473).
Judging from the MACD indicator, the DIFF line and the DEA line are still below the zero axis, indicating that the current rebound is a technical rebound and no effective reversal has yet formed.
The RSI indicator is 54.71, which has entered the neutral to strong range, but is far from the overbought level, indicating that the exchange rate may still fluctuate in the short term.
Important support levels: 1.3400, 1.3364
Important resistance levels: 1.3473 (upper Bollinger band), 1.3500
Overall, the analysis shows that the pound is currently in a staged rebound, but the main trend is still bearish. Unless it can effectively break through 1.3500, the market is expected to rebound at a larger level, otherwise there is still a risk of a decline.
Market sentiment observation
Judging from the current market sentiment, the bullish sentiment of the pound has warmed up, but the overall market is still cautious. The disagreement among Fed officials has caused the market to doubt the short-term trend of the US dollar, and some short covering has pushed up the short-term rebound of the pound.
However, due to the weak fundamentals of the UK economy, the market remains pessimistic about the long-term trend of the pound, the bearish market sentiment has not fundamentally changed, and the market's confidence in the pound remains weak.
Outlook
Short-term outlook:
Analysts believe that if the exchange rate is blocked in the 1.3460-1.3473 range, it may test the 1.3400 support again in the short term, or even fall back to 1.3364;
If it successfully breaks through 1.3473, it is expected to rise to the retracement position of the previous low of 1.3562 in the short term, but it is necessary to pay attention to whether the market trading volume can be effectively expanded.
Mid- to long-term outlook:
From a macro-cycle perspective, the overall structure of GBP/USD is still in a downward trend channel, dominated by the bear market. The fundamentals are still weak, and the slowdown in UK economic growth coupled with inflationary pressure complicates the policy game;
If the US tariffs are officially implemented in August, the market risk aversion may further push up the dollar and the pound will face a new round of pressure. However, if the Fed actually starts to cut interest rates, the dollar rebound may temporarily peak, and the pound is expected to usher in a technical rebound.
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