GBP/USD Stalls at 10-DMA; BoE Decision Risks Short-Term Bearish Move
Technical Analysis:
GBP/USD ended Friday slightly higher at 1.3281, paring early session gains after failing to hold above key resistance at the flattening 10-day moving average (DMA) at 1.3336. The pair initially bounced from session lows of 1.3265, reacting positively to stronger-than-expected U.S. non-farm payrolls data, but sellers quickly reasserted control, confirming the short-term bearish sentiment. The inability to close above the pivotal 10-DMA highlights underlying weakness, potentially setting the stage for renewed downside in the coming days.
From a technical standpoint, GBP/USD remains vulnerable while capped below the 10-DMA. Immediate downside support is situated at Friday and Thursday lows near 1.3260–65, which is now a critical near-term level. A daily close below here would open scope for a more substantial correction toward the rising 21-DMA at 1.3187, and subsequently toward stronger support at 1.3079—the 50% Fibonacci retracement of the April rally from 1.2712 to 1.3445. Momentum indicators reflect bearish risks; the daily RSI continues to trend downward, underscoring waning bullish impetus.
Fundamentally, market attention shifts sharply toward next week’s critical central bank events, notably the BoE and Fed rate decisions. With the market widely pricing in a 25bp BoE rate cut against an expected Fed hold, sterling could face renewed selling pressure early in the week. However, given that U.S. and UK rate projections align at approximately 3.6% by year-end 2025, the pound’s longer-term downside may remain limited. Bulls need a decisive recovery above the 10-DMA and subsequently a sustained move past April’s peak at 1.3445 to firmly reestablish upward momentum.