GBP/USD Outlook: Bullish Momentum Holds as Pair Tests 1.2650 Support

British Pound Faces Resistance at 1.2690 While Holding Key Support Levels

The GBP/USD pair remains in a bullish phase, despite a pullback toward 1.2650 during Wednesday’s Asian session. The pair continues to trade within an ascending channel, supported by strong technical indicators and robust price action.

The 14-day Relative Strength Index (RSI) remains above 50, signaling that bullish momentum is still intact. Additionally, GBP/USD is trading above both its nine-day and 14-day Exponential Moving Averages (EMAs), reinforcing the short-term uptrend.

However, resistance at 1.2690 remains a key hurdle, and a break above this level could accelerate gains toward 1.2750 and 1.2811. Conversely, a break below key support at 1.2613 could lead to a deeper retracement toward 1.2500.

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GBP/USD Technical Analysis – Key Levels to Watch

📊 Technical Indicators Confirm Uptrend, But Resistance at 1.2690 Remains Critical
✅ GBP/USD is holding above both the nine-day EMA (1.2613) and the 14-day EMA (1.2581).
✅ RSI remains above 50, confirming that buyers remain in control.
✅ Ascending channel formation suggests a bullish continuation pattern.

📈 Resistance Levels in Focus:

1.2690 – Two-month high, immediate resistance.
1.2750 – Upper boundary of the ascending channel.
1.2811 – Three-month high, last seen on December 6.

📉 Support Levels to Watch:

1.2613 – Nine-day EMA, first support.
1.2581 – 14-day EMA, secondary support.
1.2500 – Lower boundary of the ascending channel.

Fundamental Overview – What’s Driving GBP/USD?

📌 US Dollar Strength Weighs on GBP

The US Dollar Index (DXY) remains firm, limiting GBP/USD gains.
Investors are closely watching US economic data and Federal Reserve policy expectations for further direction.

📌 UK Economic Outlook Remains Mixed

UK inflation and employment data will play a key role in determining the Bank of England’s (BoE) next policy moves.
Rising rate expectations could support GBP, while signs of economic slowdown may trigger renewed selling pressure.

📌 Market Sentiment & Risk Appetite

The GBP/USD pair remains sensitive to global risk sentiment, especially amid concerns over trade tensions and monetary policy shifts.

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Conclusion – Will GBP/USD Break Resistance or Correct Lower?

💡 Market Outlook:
✅ If GBP/USD clears 1.2690, a rally toward 1.2750 and 1.2811 is likely.
✅ If the pair drops below 1.2613, it could test 1.2581 and 1.2500.
✅ Traders should monitor BoE signals, US economic data, and broader risk sentiment.

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Hamza Shah