GBP/USD declined again on Wednesday, reflecting sustained pressure on the British pound against the US dollar. The pair is now approaching the 50-day EMA and the key 1.35 level, placing the market in a clearly binary setup. A daily close below 1.35 would significantly increase the probability of a move toward the 200-day EMA, currently located near 1.33617. A decisive break beneath that longer-term average could shift the broader trend structure from consolidation to a deeper corrective phase.
On the upside, if GBP/USD stabilizes and produces a daily close above 1.36, the technical outlook would improve materially. Such a move would open the path toward the 1.3750 region, where previous resistance has capped advances. The current structure suggests that momentum traders are waiting for confirmation in either direction before committing to larger positions. It is also important to factor in positioning dynamics surrounding the US dollar. The dollar has reached its highest level of net short positioning in 14 years, a condition that historically increases the probability of a reversal.
Combined with oversold technical readings, this creates room for value-driven buying in the greenback. Additionally, US economic data has shown resilience. The labor market remains firmer than many anticipated, and the upcoming core PCE inflation data on Friday could materially influence rate expectations and, by extension, the direction of GBP/USD. On the UK side, macro data has softened. Employment figures have declined, unemployment claims have increased, and the jobless rate has risen to 5.2%, the highest level since early 2021. This development strengthens the case for a more dovish stance from the Bank of England. If rate-cut expectations in the UK accelerate while the Federal Reserve maintains a cautious tone, policy divergence would likely weigh further on GBP/USD.
In summary, GBP/USD is positioned at a critical technical juncture. A sustained break below 1.35 favors downside continuation toward the 200-day EMA, while a daily close above 1.36 would shift momentum back in favor of the bulls. Until Friday’s inflation data provides clarity, the pair is likely to remain in a high-stakes consolidation phase.