GBP/USD Daily Chart Analysis

The British Pound Sterling (GBP) against the US Dollar (USD) has shown resilience in the face of declining U.S. Treasury (UST) yields, though it has retreated from its early North American 10-week high. The GBP/USD pair remained relatively flat in the North American afternoon, showing a minor decrease  at 1.2604, with the day’s range between 1.2644 and 1.2592. Despite the fall in UST yields, Sterling flirted with its early September high, suggesting underlying strength.

A key upcoming event that could significantly impact the pair is the release of the U.S. core Personal Consumption Expenditures (PCE) data on Thursday, which is expected to set the tone for UST and USD towards the year-end. Additionally, the Bank of England’s (BoE) Deputy Governor Dave Ramsden’s remark about monetary policy remaining ‘restrictive’ for an extended period could influence Sterling’s performance.

From a technical standpoint, the GBP/USD pair finds support at the Monday low of 1.2547, which is the 50% Fibonacci retracement of the move from 1.2450 to 1.2644. Notably, the 20-Day Moving Average (DMA) crossing above the 50-DMA, respectively, indicates a bullish trend, especially considering the UK’s yield advantage.

Resistance levels are identified at 1.2650 the Monday high of 1.2644, and the 50 Day Moving Average at 1.2650. The trend is positive, with the GBP/USD pair trading within a tight but busy range between 1.2620 and 1.2632. The moving averages (5, 10, and 21-day) and momentum studies are on the rise, reinforcing the bullish trend. The 21-day Bollinger Bands are also climbing, maintaining the positive trend setup. The next significant resistance level is at 1.2720 of the July to October fall.

However, a close below the 50-day moving average at 1.2600 would undermine this topside bias. The initial support and resistance are framed by the  range of 1.2600 to 1.2700.

Overall, GBP/USD is showing a bullish trend, underpinned by technical indicators and bolstered by the UK’s yield advantage. However, upcoming economic data releases and central bank policies on both sides of the Atlantic will be critical in determining the pair’s future trajectory.