The GBP/USD exchange rate is currently navigating a critical juncture, with initial resistance anticipated at the key psychological threshold of 1.3400. Recent analysis reveals a weakening bullish trend as the currency pair has slipped below its previously established ascending channel pattern. During Asian trading hours on Monday, the GBP/USD stabilized around 1.3320 following losses in the previous trading session.
Despite the recent pullback, the pair maintains its position above the nine-day Exponential Moving Average (EMA) of 1.3274, indicating some lingering short-term bullish momentum. Additionally, the 14-day Relative Strength Index (RSI) remains above the neutral level of 50, further suggesting a bullish bias in the short term.
Looking at potential resistance levels, the GBP/USD may encounter challenges at the psychological mark of 1.3400. Should it surpass this level, further resistance may be found at 1.3434, a point that last appeared in September 2024 and represents the lowest level since March 2022. A sustained move above these resistances could reinforce bullish sentiment, with targets eyeing the upper boundary of the ascending channel around 1.3480.
However, the recent break below the ascending channel puts downward pressure on the exchange rate, drawing attention to immediate support at the nine-day EMA of 1.3274. A decisive breach below this level could weaken the short-term bullish outlook, with the 50-day EMA at 1.2980 serving as the next significant support level.
If the decline continues past the 50-day EMA, it could significantly impact the medium-term outlook, potentially pushing the GBP/USD toward a two-month low of 1.2577, which was recorded on March 3, and further down to the three-month low of 1.2249, observed on February 3. Traders are advised to monitor these key levels closely as developments unfold.
