The GBP/USD pair is on the rise, nearing 1.3685, which is the peak level since September 17, 2025, during the early European session on Tuesday. The Pound shows an upward movement against the US Dollar following the release of stronger-than-anticipated UK Retail Sales and Purchasing Managers’ Index figures. These positive reports have led some experts to anticipate a potential delay in further reductions by the Bank of England. The currency pair demonstrates an upward trend, hitting around 1.3685 during the early European session on Tuesday. The outlook for the pair remains positive; however, further consolidation should not be overlooked considering the overbought RSI conditions. The first support level to keep an eye on is 1.3480.
Concerning the USD, concerns about the Federal Reserve’s autonomy and worries about a possible US government shutdown could apply downward pressure on the US Dollar. The announcement about the next chairman of the Federal Reserve by US President Donald Trump could take place in January. Traders express worries about the possible erosion of autonomy for the US central bank after a Trump nominee is selected as Fed Chairman. Markets might take a careful approach as they near the Fed’s interest rate decision set for Wednesday. The US Federal Reserve is expected to keep interest rates steady during the upcoming policy meeting on Wednesday, following three consecutive cuts at the end of 2025. Investors will closely monitor the Fed press conference following the policy meeting, as it could provide important insights for the months ahead. Any hawkish remarks from Fed officials may bolster the Greenback and create difficulties for the major pair.
In the daily chart, GBP/USD remains significantly above the ascending 100-day EMA at 1.3385, maintaining a robust bullish perspective. The average is on the rise, and any dips are expected to stay above this threshold. RSI(14) shows a reading of 72, suggesting overbought conditions and a possible slowdown in momentum. Initial resistance is positioned at the upper Bollinger Band, currently at 1.3656, while the first support level is indicated by the 20-day middle band at 1.3480.
Bollinger Bands are widening, suggesting a rise in volatility as the price surpasses the upper band, leading to a prolonged upward movement. If momentum fades, a pullback might target the mid-band, with more robust support found at the lower band at 1.3306. Staying above the band breakout would keep the upward momentum intact; nonetheless, this setup carries an increased risk of a sudden reversal.