GBP/USD Retreats from 2025 Highs as Fiscal Worries Weigh; Focus Shifts to UK Retail Data
Technical Analysis:
GBP/USD edged slightly higher but essentially flat-lined into Thursday’s North American close, settling at 1.3420 (+0.02%), retreating from Wednesday’s fresh 2025 high of 1.3468 set after robust UK inflation data. Despite initially firming to a session high at 1.3440, sterling bulls were cautious, trimming long positions ahead of the upcoming U.S. holiday weekend. The pullback from this critical high underlines the cautious sentiment among traders as elevated gilt yields and persistent UK fiscal concerns overshadow recent bullish momentum triggered by inflation dynamics.
From a technical perspective, GBP/USD continues to face substantial overhead resistance. Immediate resistance now lies firmly at Thursday’s session peak (1.3440), with stronger technical barriers at the 2025 high (1.3468) from May 21, just below the upper boundary of the 30-week Bollinger Band at 1.3476. A clear break and close above this significant cluster would be required for bulls to regain momentum, paving the way toward psychological targets at 1.3500 and eventually the early-2022 peaks closer to 1.3600. Currently, however, daily momentum indicators such as RSI and stochastics are showing signs of exhaustion, suggesting a risk of deeper consolidation or correction if bulls fail to reclaim and hold above 1.3470 soon.
On the downside, immediate support has emerged clearly at Thursday’s intraday low (1.3387), closely followed by the rising 10-day moving average at 1.3323. A breach below this critical moving average would challenge the bullish structure, possibly opening further downside toward the May 16 daily low at 1.3251. Friday’s release of UK retail sales data will be crucial, potentially clarifying the economic outlook and guiding near-term price action. If the data reflects weaker-than-expected consumer spending amid fiscal uncertainty and ongoing inflationary pressures, GBP/USD could quickly retreat toward lower support zones, placing the recent bullish trend at risk.