The GBP/USD currency pair has been gaining attention as the British Pound rises against the US Dollar. Recent price action highlights a significant support zone near $1.3519, which has become the key pivot for traders in today’s session.
The pair is currently exhibiting a bullish bias, supported by a combination of technical factors and fundamental drivers such as expectations of Federal Reserve rate cuts. The brokers at Arbitics provide a comprehensive breakdown of this topic in this article.
GBP/USD Analysis
In the previous GBP/USD forecast, bearish sentiment was highlighted, with the expectation of a downward move from a bearish inflection point. However, that scenario failed to materialize as the London trading session did not retest the projected entry zone. Instead, the market shifted into a stronger bullish trend, with the US Dollar weakening across the board.
The underlying dynamic here is not necessarily British Pound strength, but rather broad-based Dollar weakness. Global markets are increasingly pricing in more aggressive Fed easing, with expectations of at least 75 basis points in rate cuts over the remainder of 2025.
This macro shift is weighing heavily on the greenback, while equity markets continue to rally on renewed optimism.
Technical Picture of GBP/USD
From a technical analysis perspective, GBP/USD has been forming a U-shaped bottom near the critical area between $1.3519 and $1.3500. This zone has now established itself as a key support level, and traders are closely watching whether the pair can hold above it.
- Support Zone: $1.3519 – $1.3500
- Immediate Resistance: $1.3580 – $1.3600
- Medium-Term Resistance: $1.3700
As long as the price action remains above $1.3519, the bullish case stays valid. A break below $1.3500, however, would undermine this momentum and could trigger renewed bearish sentiment.
The moving averages confirm short-term strength, with the 20-period EMA now pointing higher. Momentum indicators such as the Relative Strength Index (RSI) are also signaling bullish pressure without yet reaching overbought territory, leaving room for further upside.
Key Fundamental Drivers
The fundamental backdrop is playing a critical role in GBP/USD price action:
- Federal Reserve Policy: Market consensus is leaning towards aggressive monetary easing by the Fed, with expectations for 0.75% in rate cuts before year-end. This is creating persistent downward pressure on the US Dollar Index (DXY).
- Risk Sentiment: Global equities are trading higher, reflecting optimism around lower borrowing costs. A rising risk appetite typically weighs on safe-haven flows into the Dollar, benefiting risk-linked currencies like GBP.
- UK Economic Outlook: While the UK economy is not particularly robust, the Bank of England has maintained a cautious stance on rate adjustments. This relative stability allows the Pound to gain when the Dollar weakens.
- US Inflation Data (CPI/PPI): Today’s US inflation release is the major event risk. A reading below 0.3% month-on-month would likely trigger a bullish breakout in GBP/USD, while a stronger inflation figure would revive Dollar strength and weigh on the pair.
GBP/USD Trading Signal: Bullish Above $1.3519
The current Forex signal is to remain bullish above $1.3519. This level has already been tested as support and represents the line in the sand for short-term positioning.
The biggest risk lies in the US inflation data release later today. Traders should exercise caution around the event, as it could trigger sharp volatility spikes and even reverse short-term signals. Additionally, any hawkish Fed commentary could strengthen the Dollar unexpectedly.
Market Scenarios to Watch
Bullish Scenario: If the pair sustains above $1.3519, the path of least resistance remains higher. A clean breakout above $1.3600 would open the door toward $1.3700, establishing a stronger medium-term uptrend.
Bearish Scenario: If the price fails to hold above $1.3519 and breaks decisively below $1.3500, this would invalidate the current bullish outlook. A deeper retracement could then test $1.3450 or even $1.3400 support zones.
Conclusion
The GBP/USD Forex signal is firmly bullish above $1.3519, with technical momentum favoring buyers and fundamentals driving Dollar weakness. The support zone between $1.3519 and $1.3500 will be pivotal throughout today’s trading.
Traders should remain aware of the upcoming US inflation release, which could significantly impact volatility and determine the next directional move.
Overall, the trend favors long positions as long as support holds, with upside targets at $1.3580, $1.3620, and potentially $1.3700. For now, the market sentiment leans bullish, but the wild card remains the inflation print and its influence on Federal Reserve expectations.
