Market Analysis: GBP/USD bulls don’t give up despite facing increased resistance

GBP/USD is back attempting to build the gains further after snapping a 7-day winning streak on Monday as the UK was closed for a Bank Holiday. The pair climbed over 3% in that time but the gains amount to 4.4% from the lows on August 8.

Powell’s commentary at the Jackson Hole Symposium last Friday added further bearish pressure on the dollar as he all but confirmed a rate cut in September following a softening in US economic data. With a relatively thin economic calendar this week we could see traders turn their attention to the US PCE data released on Friday to get further confirmation that a rate cut is the only viable option at the next FOMC meeting. If so, we could see further weakness in the US dollar, allowing GBP/USD to continue building higher. If, however, the data comes in stronger than expected we could see markets doubt on the magnitude of the cut (25bps vs 50bps) which could see some of the recent moves undone.

GBP/USD daily chart

_{Past performance is not a reliable indicator of future results.}

The GBP/USD daily chart has started to show signs of extreme over-extension in the bullish rally as the pair crosses over 1.32 for the first time since April 2022. Last time the RSI was this overbought was in July 2023 but back then the price topped at 1.3140. If traders can consolidate above 1.3229, we could see the focus set on 1.33 over the coming days. That said, there is likely to be some resistance in the move higher as a correction is likely and we could see sellers trying to find a good entry point. For now, the bullish bias remains intact as long as GBP/USD remains above 1.30 even as a corrective selloff takes place.