GBP/USD Rally Stalls Near 1.33 Amid Exhaustion Signals; Risk of Pullback Increases
Technical Analysis:
GBP/USD’s bullish momentum faced significant resistance near the psychological barrier of 1.3300 on Wednesday, marking the pair’s seventh consecutive day of gains—its longest winning streak since August 2024—but failing to breach this critical technical threshold. The daily high registered at 1.3292, just short of 1.3300, highlights mounting exhaustion among bulls, confirmed by a clear negative RSI divergence on intraday charts. This technical pattern suggests that upward momentum is waning, raising the risk of a potential corrective pullback in the short term.
The breach below the 20-hour moving average (currently around 1.3240) further underscores growing downside vulnerability, suggesting the recent bullish trend may now enter a corrective phase. Immediate support is firmly established at 1.3207, corresponding to the previous year-to-date high, which should act as a significant pivot. Below this key support, further bearish momentum could quickly target deeper support near the psychologically important 1.3150 level. A close below 1.3207 would confirm bearish sentiment, potentially signaling a shift in market dynamics toward increased caution amid broader tariff-related and BoE policy uncertainties.
On the fundamental side, softer-than-expected UK services CPI at 4.7% versus BoE’s forecast of 4.9% had minimal immediate impact on GBP but highlights growing dovish risks around the Bank of England’s next policy decision. With dovish BoE expectations increasing and the market’s attention still fixated on U.S. tariff developments, traders may seek safer positions or shift to EUR/GBP, given its technical resilience around the key 200-week moving average (0.8545). In short, despite recent strength, GBP/USD bulls must now exercise caution as exhaustion signals emerge, suggesting potential retracement risks in coming sessions.