GBP/USD turned lower after moving close to 1.3600. Intraday trading is expected to remain within 1.3495 to 1.3555.
The move followed a rise to 1.3595, near the upper end of a 1.3545 to 1.3600 range. The pair then fell to 1.3518.
Near Term Momentum Weakening
Over a 1 to 3 week view, upward momentum is weakening and the chance of further Pound gains is falling. A drop below 1.3480 would confirm that the latest rise has stopped.
We are seeing a familiar pattern where upward momentum for the Pound is fading as it approaches significant resistance. The currency pair has struggled to decisively break the 1.2800 level after a strong run-up from below 1.2600 last month. This suggests that the current rally may be losing steam.
Looking back to a similar situation in early 2025, we saw the Pound reverse sharply after nearing the 1.3600 mark. The advance stalled and a period of consolidation followed, as the initial bullish conviction waned. That historical precedent makes us cautious about the pair’s ability to push much higher from its current position.
Recent UK inflation data from March 2026, which came in at a slightly sticky 2.5%, has been the primary driver of the Pound’s strength. However, this news now appears to be fully priced into the market. It leaves little room for further upside unless fresh UK-positive catalysts emerge.
Dollar Support Limits Upside
On the other side of the pair, strong US economic data is providing a headwind. The latest Non-Farm Payrolls report showed a robust gain of 280,000 jobs, reinforcing the view that the Federal Reserve will be in no hurry to cut interest rates. This underlying dollar strength is likely to cap any significant gains for GBP/USD in the near term.
For derivative traders, this environment suggests selling premium may be an effective strategy. We see an opportunity in selling call options with strike prices at or above the 1.2850 level. This capitalizes on the view that the rally will stall and the pair will remain in a range.
Furthermore, recent commitment of traders reports show that speculative long positions in the Pound are at their highest level in over a year. This crowded positioning often precedes a correction, as a slight downturn can trigger a cascade of selling. We should therefore watch for signs of exhaustion.
A key level to monitor is 1.2680, which has acted as a recent support. A definitive break below this level would confirm that the recent upward advance has concluded. This would signal a shift in momentum and suggest that a deeper pullback is likely.
