GBPUSD Climbs to 2025 Highs, Silver Holds Steady

Key Events

• GBPUSD hits a new 2025 high, testing critical resistance at 1.2680 ahead of Flash PMI data.
• Silver holds below key resistance levels, weighed by geopolitical uncertainty.
• Technical Analysis: GBPUSD (3-Day Time Frame), XAGUSD (Daily & Monthly Time Frames).

GBPUSD Climbs to 2025 Highs on Strong Inflation Data, Flash PMI Data Ahead

UK economic data has exceeded expectations this week, with inflation rising from 2.5% to 3%, aligning with inflationary concerns in the US after a significant surge in CPI figures. However, the Federal Reserve remains focused on its preferred inflation gauge, Core PCE, scheduled for release next Friday to provide a clearer inflation outlook.

Additionally, Flash Manufacturing and Services PMI data from the Eurozone, UK, and US are set for release today, adding further insight into market sentiment.

Silver Holds Below the 33 Mark as Geopolitical Deals Develop

While gold hovers near record highs amid safe-haven demand and geopolitical uncertainty, silver remains below the $33 mark and its one-year primary channel, awaiting confirmation of direction.

Potential drivers for silver’s uptrend: rising inflation concerns, escalating geopolitical tensions, and expanding industrial demand, particularly in the growing tech sector. Possible retracement factors: Peace agreements easing market uncertainty, easing inflationary concerns, and shifts in industrial demand affecting silver consumption.

Technical Analysis: Quantifying Uncertainties

GBPUSD – 3-Day Time Frame – Log Scale

Source: Tradingview

The British Pound’s bullish rebound from 1.21 aligns with the 100% Fibonacci extension of the uptrend between 1.2099 (low), 1.2523 (high), and 1.2249 (low). The 3-day momentum indicator suggests an inverted head and shoulders breakout, while the daily RSI sits at 60, approaching overbought territory.

Bullish Scenario: A clear close above 1.2680 could extend gains toward the 1.272 Fibonacci extension at 1.28, aligning with a major trendline connecting GBPUSD’s declining highs from 2014 to 2021.

Bearish Scenario: Failure to break 1.2680 could trigger a retracement toward 1.2550 and 1.2460. A close below 1.2360 may shift sentiment bearish, opening the door for further downside movement.

Silver: XAGUSD – Daily Time Frame – Log Scale

Source: Tradingview

Silver’s rally remains contained within the lower boundary of its up-trending channel (Oct 2023 – Oct 2024), struggling to break the $33.40 mark.

Bullish Outlook: A clean close back inside the channel could drive silver toward the $34.80 high. However, caution is warranted in the event of further upside, as the Relative Strength Index (RSI) nears overbought levels, previously respected in Nov 2023, April 2024, May 2024, and Oct 2024.

Bearish Risks: If silver fails to break $33, a retracement toward key support levels at $31.60, $30.50, and $29.70 could follow.

Silver: XAGUSD – Monthly Time Frame – Log Scale

Source: Tradingview

From a long-term perspective, silver’s inverted head and shoulders pattern on the monthly chart paves the way for further upside potential.

Bullish Scenario: A confirmed breakout above $35 could extend gains toward $37.50, $40, and $42.

Bearish Risks: Historical patterns indicate that price targets aren’t always met precisely, keeping downside risks from the recent $34.80 high valid.

Written by Razan Hilal, CMT

Follow on X: @Rh_waves

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