GBP/USD slipped from an over two-month high on Thursday as a firmer US Dollar pressured the pair, yet the broader technical setup still favors buyers. FXStreet expects dip-buying on pullbacks below the 1.3500 mark.
The GBP/USD pair attracted sellers on Thursday and eroded part of the previous day's strong gains to an over two-month high around the 1.3555-1.3560 region. Spot prices held modest intraday losses near the 1.3525 zone through the first half of the European session, though the broader setup favors bullish traders and warrants caution before positioning for any further fall.
A firmer Dollar caps the Pound
A firmer US Dollar drove the retreat. As investors digested this week's soft US Consumer Price Index and Producer Price Index reports, elevated crude oil prices revived energy-driven inflation fears and Federal Reserve rate hike expectations. That, along with escalating US-Iran tensions, supported the safe-haven greenback and weighed on the pair.
The Pound, meanwhile, might continue to draw support from easing UK political uncertainty and growing optimism over the country's fiscal outlook. Incoming UK Prime Minister Andy Burnham has pledged to anchor his agenda on fiscal discipline and is expected to pick a fiscally conservative finance minister, which helps limit the downside.
Technical picture stays constructive
The overnight breakout through the 61.8% Fibonacci retracement level of the May-June fall was seen as a fresh trigger for bulls, following repeated rebounds from the 1.3350 confluence. Strength beyond the 1.3500 psychological mark validates the constructive outlook and backs the case for further gains.
But the Relative Strength Index at 72.2 signals overbought conditions that could slow the pace of gains rather than reverse the tone. Immediate resistance sits at the 78.6% Fibo level at 1.3547, ahead of 1.3657. On the downside, initial support lies at 1.3461, then 1.3401, with a stronger demand zone at the 1.3345-1.3340 confluence.
Source: FXStreet
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