GBP/USD Outlook : Weekly Reversal Tests Key Resistance

GBP/USD has staged a sharp rebound after a three-week decline, reversing higher from a key Fibonacci support zone. The move has produced an outside weekly reversal and pushed price back into a critical resistance area near recent January highs. How the pair behaves around this zone will be decisive in determining whether the recovery can extend or if the broader corrective structure remains intact.

Technical Structure

The recent pullback found support at the 38.2% retracement of the November rally near 1.3355, a level that has now proven technically significant. The rebound from this zone has shifted near-term risks higher, but price is now confronting its first meaningful hurdle.

GBP/USD is testing resistance around 1.3502, which aligns with the January high close and the upper boundary of a descending pitchfork drawn from the 2025 highs. This area has previously capped upside attempts and remains a key inflection point.

GBP/USD Weekly Chart

Upside Scenario

A sustained weekly close above 1.3502 would strengthen the bullish case and open the door toward:

• 1.3573, the 78.6% retracement of the September decline

• 1.3648, the 2025 high weekly close and a major technical convergence zone

A clear break and hold above this region would shift the broader structure more decisively in favour of the bulls, with scope toward the 1.3750 area over time.

Downside Risk

Failure to sustain gains above resistance keeps the risk of another pullback alive. Initial support remains at 1.3355. A decisive break below this level would weaken the recovery signal and refocus attention on:

• 1.3268, near the 52-week moving average

• 1.3223, a key Fibonacci retracement and trendline convergence

A sustained move below this zone would suggest a more meaningful top is forming and raise the risk of a deeper corrective phase.

Event Risk and Macro Considerations

Near-term price action will also be shaped by upcoming UK retail sales data and next week’s FOMC decision. While rates are widely expected to remain unchanged, Chair Powell’s guidance will be closely watched. Recent resilience in US labour data may limit near-term rate cut expectations, adding an additional layer of volatility risk for GBP/USD.

Bottom Line

GBP/USD has delivered a technically constructive rebound, but the recovery is now being tested at a critical resistance zone. A weekly close above 1.3502 is needed to confirm further upside potential. Until then, the pair remains vulnerable to renewed consolidation or rejection, with risk management increasingly important around current levels.

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