GBP/USD Bulls Challenged at 1.32 Resistance; UK Data Critical for Sustaining Rally
Technical Analysis:
GBP/USD extended recent gains on Monday, posting a notable advance of 0.8% to test the psychologically important resistance level at 1.3200. The session high at 1.3201 precisely matched the year-to-date peak, indicating that bullish momentum has encountered significant technical resistance at this key barrier. This latest upswing, driven largely by persistent selling in EUR/GBP and broad-based weakness in the U.S. dollar, marks a substantial rebound from the recent low near 1.2750, demonstrating sterling’s underlying bid amid the ongoing confidence crisis facing the dollar.
From a technical standpoint, a sustained breakout above the pivotal 1.3200 level would strongly reinforce the bullish case, clearing the way toward a retest of the 2024 high near 1.3434. Momentum indicators, including daily RSI, remain constructive and upward-sloping, suggesting ample room for bullish continuation. However, the clear rejection at the 1.3200 barrier so far indicates that further confirmation of bullish intent—ideally in the form of a daily close above 1.3200—is needed to convincingly signal the next leg higher.
On the downside, GBP/USD has well-defined support levels that traders should monitor closely. Immediate support is provided by the 200-day moving average (DMA) at approximately 1.2818, closely followed by firmer technical support at the 55-DMA around 1.2754. With critical UK employment data on Tuesday and inflation data (CPI) due Wednesday, any downside surprises could trigger a quick retreat toward these support zones. Conversely, data that aligns with market expectations or better could facilitate a successful breakout above 1.3200, opening the pathway to significant upside momentum.