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Bullish Momentum May Build from Key Moving Averages
Forex
Economic
Summary:
The proximity of these moving averages, combined with a slight rebound from this support zone, suggests the potential for a bullish reversal in the short term.
Buy
CLOSEDGBPUSD
End Time
1.35500
Entry Price
1.35950
TP
1.35100
SL
1.35558 -0.00169 -0.12%
450
Points
Profit
1.35100
SL
1.35951
CLOSING
1.35500
Entry Price
1.35950
TP
Tensions in the Middle East continue to escalate, with Iran reportedly informing mediators from Qatar and Oman that it “will not negotiate under attack,” according to a source familiar with the ongoing dialogue. This comes amid intensified military exchanges between Iran and Israel. The same source denied recent reports suggesting that Tehran had reached out to Qatar and Oman with a proposal to involve the U.S. in brokering a ceasefire or resuming nuclear talks, stating such claims are “inaccurate.”
Meanwhile, U.S. President Donald Trump affirmed Washington’s unwavering support for Israel, stating on Sunday that although he hopes for a resolution between Iran and Israel, “they’ll have to fight it out.” Trump also reportedly rejected a proposed Israeli plan to target Iran’s Supreme Leader Ayatollah Ali Khamenei, emphasizing his preference to keep the U.S. from being drawn directly into the conflict—for now.
On the economic front, Thursday’s release of the U.S. Producer Price Index (PPI) for May added to signs of cooling inflation. Headline PPI rose 2.6% year-over-year, matching analysts’ expectations and slightly surpassing April’s 2.5%. More notably, core PPI—which excludes volatile food and energy prices—eased to 3.0% from the previous month’s 3.2%, reinforcing the narrative that inflationary pressures are beginning to moderate.
Following a weaker-than-expected Consumer Price Index (CPI) reading earlier in the week, the PPI data has fueled market expectations that the Federal Reserve may be positioning for a potential rate cut as soon as September. A softer inflation outlook typically benefits gold, as the precious metal becomes more attractive in a low-rate environment due to its non-yielding nature.
Across the Atlantic, the latest figures from the UK’s Office for National Statistics (ONS) revealed a sharper-than-expected contraction in economic activity. The British economy shrank by 0.3% in April, missing the consensus forecast of a 0.1% decline. This downturn follows a 0.2% GDP expansion in March. According to the ONS, the contraction was largely driven by a significant drop in exports to the United States, linked to the recent implementation of U.S. trade tariffs. "Following four consecutive monthly increases, April saw the largest recorded monthly fall in goods exports to the U.S., with broad-based declines across most categories of goods," the agency reported.
This unexpected weakness may pressure the Bank of England (BoE) to reconsider its cautious approach to monetary policy. In May, the central bank cut interest rates by 25 basis points to 4.25%, signaling a "gradual and measured" stance on further easing. However, the recent data could prompt a more flexible shift if economic weakness persists.
Technical analysis
The GBP/USD pair is currently finding support near the 1.3536 level, where both the 100-period and 200-period moving averages on the one-hour chart are closely aligned—at 1.3543 and 1.3546, respectively. The proximity of these moving averages, combined with a slight rebound from this support zone, suggests the potential for a bullish reversal in the short term. A sustained move higher could open the door to retest the next resistance zone near 1.3595.
The Relative Strength Index (RSI) stands at 43.61, a level that remains within neutral territory. However, if the pair continues to hold above the current support, the RSI may begin to trend higher, possibly confirming a new upward leg. Conversely, if GBP/USD breaks decisively below 1.3536, bearish momentum could gain traction, particularly if renewed demand for safe-haven assets like the U.S. dollar strengthens amid geopolitical uncertainty.
Trading Recommendations
Trading direction: Buy
Entry price: 1.3550
Target price: 1.3595
Stop loss: 1.3510
Validity: Jun 20, 2025 15:00:00
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