GBP/USD – Bears Targeting Key Support After Weak UK Data
GBP/USD – Bears Targeting Key Support After Weak UK Data
The GBP/USD currency pair is exhibiting clear bearish signals as it retreats sharply from intraday highs set in early Thursday trading, following a series of disappointing UK economic data releases. Sterling has faced renewed selling pressure, currently trading 0.46% lower at approximately 1.3519 in New York’s afternoon session, marking a substantial pullback from the intraday peak at 1.3588. The daily range, extending from 1.3588 to 1.3505, clearly illustrates the bearish momentum now driving the pair.
Fundamental Catalysts:
This bearish shift was primarily catalyzed by underwhelming UK flash PMI and CBI industrial figures. Both indicators fell short of market expectations, amplifying concerns over the resilience of the UK economy and increasing speculation that the Bank of England (BoE) may be compelled to adopt a more dovish monetary policy stance. Furthermore, diverging yield dynamics between the U.S. and the UK—where rising U.S. Treasury yields outpace the UK’s gilt yields—add to the downside pressure on the British pound.
Compounding the bearish sentiment, the European Central Bank’s (ECB) decision to maintain interest rates, combined with their cautious optimism, underscores a policy divergence scenario. Market pricing, as reflected by the LSEG’s Interest Rate Probability Rates (IRPR), indicates a potentially more dovish trajectory ahead for the UK, compared to the ECB’s recent neutral stance.
Technical Setup:
From a technical viewpoint, GBP/USD faces significant challenges as it attempts to maintain its footing near the critical support zone around the 1.3500 psychological mark:
Support Levels: Immediate support aligns at the daily low of 1.3505, coinciding almost precisely with the critical 55-day Moving Average (DMA). A decisive break below this confluent support would significantly amplify bearish sentiment, opening the pathway toward the daily Ichimoku cloud top at 1.3475. Beyond this level, further bearish momentum may target the July 21 swing low near 1.3404.
Resistance Levels: Immediate resistance emerges at Thursday’s high of 1.3588. A breach of this level, albeit increasingly unlikely given current bearish momentum, would shift attention towards the July 4 high of 1.3681. Above this, bulls would aim for the upper 30-day Bollinger Band at 1.3766, which also corresponds closely to the recent 2025 highs near 1.3787.
Indicator Analysis:
The bearish scenario is reinforced by several technical indicators:
Moving Averages: Price action currently testing the 55-DMA support at around 1.3505 is a critical inflection point. A confirmed daily close below this average would solidify bearish control.
Oscillator Signals: The Relative Strength Index (RSI) has turned sharply lower below the neutral 50 mark, suggesting increasing bearish momentum and potential for further downside extension. Additionally, the MACD has begun to tilt negatively, poised for a bearish crossover below its signal line, signaling that selling pressure is intensifying.
Strategic Conclusion:
GBP/USD is at a pivotal juncture technically. With current price action heavily tilted toward bearish sentiment, traders should monitor closely for confirmation via a daily close below the 1.3500-1.3505 zone. A definitive break lower opens the prospect of deeper corrective moves toward 1.3404. On the upside, any rallies toward resistance at 1.3588 may be short-lived and seen as opportunities for fresh bearish entries, unless a decisive recovery in market fundamentals emerges.