GBP/USD Bulls Pause Near Key 1.3434 Resistance; Overbought Signals Suggest Caution
Technical Analysis:
GBP/USD edged back on Monday, trimming its earlier session gains after encountering strong resistance near its 2024 peak at 1.3434, marking an intraday high at 1.3421. The pullback towards the mid-1.3350s indicates traders are cautious near critical long-term resistance, especially after the pair’s robust 10-day rally that propelled it into significantly overbought territory, as indicated by the 14-day RSI. While the bullish trend remains structurally intact, the pair’s inability to sustain a clear break above 1.3434 raises the prospect of short-term corrective pressures.
Immediate support emerges around the 5-day moving average at 1.3281, closely aligned with Monday’s intraday low at 1.3266. Further downside risks may open toward the April 18 low at 1.3262, and more importantly, the previous pivotal resistance-turned-support at the April 3 high near 1.3207. A sustained retreat below this area would signal weakening bullish momentum, potentially targeting deeper corrective moves toward the 10-day moving average around 1.3188.
On the upside, bulls will need to decisively clear the 2024 high at 1.3434 to validate continuation of the bullish run. A breakout above this critical resistance would shift technical targets toward the February 14, 2022 high at 1.3640. Fundamentally, ongoing U.S. trade uncertainties and Fed-related volatility are likely to keep sterling relatively supported. However, traders should remain vigilant, as easing geopolitical or trade concerns could trigger profit-taking, especially given overextended technical indicators, leading to a near-term consolidation or pullback.