Over the past 24 to 48 hours, GBP/USD experienced notable volatility, despite the US dollar weakening amid fears of a US government shutdown and Federal Reserve policy uncertainty. This dollar softness provided support for the pound, though the pair remained near the 1.38 level. Yesterday’s closing price was 1.38025, reflecting a slight pullback, indicating cautious market sentiment in the short term.

Recent market news highlights the plunge in the US Dollar Index (DXY) due to shutdown fears, pushing investors towards sterling and euro pairs and buoying GBP/USD. Additionally, stronger-than-expected UK retail sales data offered fresh momentum to the pound. However, attention is firmly on the upcoming Federal Reserve meeting, where uncertainty over rate decisions is restraining further upward movement in GBP/USD.

For the average investor, this means when the dollar weakens due to political risks, the pound may find short-term support. But with unclear economic data and an uncertain policy outlook, the market is likely to see continued fluctuations. Investors holding GBP/USD should closely monitor US domestic developments and central bank meetings to navigate potential turning points in the market.

Daily Chart

The daily chart reveals a sustained uptrend in GBPUSD since late last year, with price repeatedly challenging the year-high at 1.3868. The 50-day and 200-day moving averages confirm a bullish alignment and current price trades well above these averages, reinforcing the upward momentum. Bollinger Bands are widening, indicating increased volatility, with price oscillating between the middle and upper bands. The MACD is positive and has crossed above its signal line, signaling strong bullish momentum. Overall, the daily chart supports a solid bullish outlook.

1H Chart

The hourly chart over the past 5 days shows GBPUSD in a short-term ascending consolidation. The 20-period and 50-period moving averages have formed a golden cross, suggesting active buying interest. The Bollinger Bands’ lower band near 1.3750 acts as a solid support, with price bouncing off it to resume upward moves. MACD histogram remains positive without divergence signals, while the 1.3800 level has turned into short-term support, confirmed by stable volume. This price action suggests accumulation and possible extension towards resistance near 1.3850.

Technical Trend:  Cautiously Bullish

Technically, GBPUSD is in a sustained bullish trend supported by clear 50- and 200-day moving average alignment. Recent golden cross on short-term averages and positive MACD reinforce buying momentum. Daily Bollinger Bands expansion hints at heightened volatility and possible breakout attempts towards new highs. On the hourly chart, support around 1.38 has held firm and volumes remain solid, indicating strong short-term buyer commitment. A sustained hold above 1.38 may open the door to test 1.3850 and 1.39 resistance levels. Traders should watch the upcoming Fed event closely for triggers to capitalize on momentum shifts.

Today’s global economic calendar features limited direct GBPUSD-impacting data. The Bank of Japan minutes released earlier may add some volatility, but minimal direct effect on GBPUSD. The key focus lies later tonight with the US Federal Reserve’s rate decision (20:00 GMT+1) and subsequent press conference (20:30 GMT+1), pivotal in shaping the dollar’s direction. A hawkish Fed stance could strengthen the USD and cap GBPUSD gains. Conversely, dovish signals may fuel further sterling advances. Traders should monitor these events as the primary catalysts for GBPUSD price swings.

Resistance & Support

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