Modest gains after hitting a high above 1.3300

• GBP/USD hits resistance at 1.3340 and forms a potential “shooting star” candlestick, signaling possible further losses.
• Key support is at 1.3250, with additional levels at 1.3239, 1.3200 and the July 14 peak at 1.3142.
• On the downside, GBP/USD needs to recover 1.3300 to retest the YTD high of 1.3340, with further resistance at 1.3437.

Sterling made minimal gains against the US dollar during the North American session after hitting a two-and-a-half-year high of 1.3340 on the back of an upbeat UK retail sales report. At the time of writing, GBP/USD is trading at 1.3282, a gain of 0.03%.

GBP/USD Price: Technical Insights

Technically, GBP/USD collided with solid resistance as the pair topped an ascending channel outside the 1.3350 test. The pair has since erased those gains, about to form a “shooting star” candle, which opens the door for further losses.

Momentum remains bullish according to the Relative Strength Index (RSI). However, a negative divergence is looming, which could cause the pair to pull back.

If GBP/USD breaks below 1.3250, further downside is seen. Once released, the next stop will be the September 6 high at 1.3239 before 1.3200. If breached, key support levels will be exposed, such as the July 14, 2023 high at 1.3142, followed by the September 11 low of 1.3001.

Conversely, if GBP/USD recovers 1.3300, the first resistance would be the year-to-date (YTD) high of 1.3340 before March 1, 2022, the high at 1.3437.

GBP/USD Price Action – Daily Chart