Key Events
- While US GDP growth has reached 2-year highs at +4.3%, UK GDP growth expectations remain sluggish near 0%, supporting dollar strength over the pound.
- US CPI reports are expected to stabilize this week near 2.7%, following a mixed jobs report, supporting continued Fed rate uncertainty and DXY consolidation.
- Key technical levels remain critical to confirming longer-term trends beyond the GBPUSD consolidation that has been in place since June 2025.
Geopolitical Tensions Reinforce Haven Demand
With rising geopolitical frictions across the globe, including developments that threaten broader political reform such as rising Iranian protests, US-EU frictions over Greenland acquisition, and recent reforms in Venezuela, haven assets gold and silver remain biased to the upside, with silver targeting triple-digit levels above 100, and gold aiming toward the 5000 checkpoint.
Dollar Holds Firm as Risk Appetite Softens
In line with this haven momentum, US indices have paused further advances toward new highs, while the DXY has held its ground despite a mixed US jobs report. This included a +55k NFP print, below the expected 66k, alongside an unemployment rate of 4.4%, lower than both the prior and expected 4.5%. The dollar’s stability continues near the 99 mark, while 100.40 remains the key barrier separating a bullish bias from a neutral one — a level that may define steeper drawdowns across major currency pairs, including GBP and EUR.
GBP Struggles Below Key Technical Barriers
With the dollar maintaining its hold despite Fed rate-cut uncertainty, GBP continues to struggle within a consolidation, capped below 1.38 — the defining barrier between long-term and short-term bullish bias — and 1.36, the shorter-term resistance.
Despite the dollar’s haven support, the dovish stance of the BoE, reflected in expectations for further cuts in 2026 following the latest 25 bps cut in December to 3.75%, remains a headwind for GBP. This is reinforced by sluggish economic growth near 0% and cooling inflation, now down to 3.2%.
These dynamics may shift should upcoming data deviate materially from expectations, particularly between US CPI and UK GDP releases this week. Key levels are highlighted below on the GBPUSD chart across both short-term and long-term horizons.
Technical Analysis: Quantifying Uncertainties
GBPUSD Outlook: Weekly Time Frame – Log Scale
Source: Trading view
From a weekly timeframe perspective, GBPUSD price action continues to respect the bounds of a consolidation connecting higher highs between July 2023 and September 2025, forming a multi-year resistance zone near 1.38.
A medium-term bullish bias remains visible:
- Weekly RSI is holding above the 50 neutral zone, leaning momentum toward a neutral-to-bullish reading.
- Price action remains supported above the 1.30 psychological level, the 9-month support, and SMA 89.
However, a clean hold above 1.36 and 1.38 is required to confirm a longer-term bullish breakout, opening the way toward 1.40 and 1.42 (2021 high), respectively.
Should price action fail to break above 1.36, short-term retracement risks increase toward 1.3280, 1.3220, and 1.30, the latter acting as a key pivot that could either support another bullish rebound or open the door to a longer-term drawdown toward 1.2940 and 1.2740.
GBPUSD Outlook: Monthly Time Frame – Log Scale
Source: Tradingview
From a monthly perspective, price action is eyeing the 2021 peak near 1.42, while trading beyond the bounds of the long-term consolidation that has framed price action since 2007. This reinforces the weekly analysis as follows:
- A sustained hold below 1.30 would likely extend the drawdown toward 1.2940 and 1.2740, aligning with the upper boundary of the long-term consolidation connecting lower highs since 2007.
- Conversely, a clean hold above the 2025 high at 1.38 would favor an extension toward the upper-bound peaks, with the 2021 high at 1.42 as the first major target.
Such a bullish scenario would likely coincide with EURUSD approaching its 2021 peak near 1.22, alongside DXY trading toward its 2021 trough near 89.
Written by Razan Hilal, CMT
Follow on X: @Rh_waves
