Bulls retain control near 1.3300, highest since March 2022

• GBP/USD draws buyers for third day in a row and draws support from a combination of factors.
• The BoE’s decision to keep rates unchanged acts as a tailwind amid the Fed-inspired USD slide.
• The technical setup remains bullish and supports the prospect of further gains in the near term.

The GBP/USD pair is trading in a positive trend for the third consecutive day on Friday and is hovering around 1.3300 during the Asian session, just below the highest level since March 2022 reached the previous day.

The British pound (GBP) continues to draw support from the Bank of England’s (BoE) decision on Thursday to keep interest rates unchanged and reduce the stock of government bonds by a further £100 billion over the next 12 months. Conversely, the US dollar (USD) is near its lowest level since July 2023 amid bets for more interest rate cuts by the Federal Reserve (Fed) and is proving to be a key factor acting as a headwind from back for the GBP/USD pair.

From a technical perspective, the sustained overnight breakout through a short-term downtrend line extending from the late August high was seen as a new trigger for bullish traders. Furthermore, the oscillators on the daily chart remain in positive territory and suggest that the path of least resistance for the GBP/USD pair is to the upside. That said, the Relative Strength Index (RSI) on the daily chart is intermittently showing overbought conditions.

This makes it prudent to wait for an intraday consolidation or a modest pullback before traders start positioning for the next leg of a positive move. However, GBP/USD looks poised to climb further towards the next relevant hurdle near the 1.3365 region before aiming to recover the 1.3400 threshold and test the March 2022 high around the 1.3435-1 region ,3440.

On the other hand, the 1.3265-1.3260 area, or the previous YTD peak, seems to be protecting the immediate downside now. Any further decline is more likely to attract new buyers and remain cushioned near the aforementioned downtrend resistance, now turned into support near the 1.3200 level. The latter should act as a key pivot point, which, if decisively broken, could accelerate the corrective decline towards testing the strong horizontal support of 1.3150.

GBP/USD 4 Hour Chart