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Confluence of Signals Hints at a Potential Rebound in GBPUSD
Economic
Central Bank
Summary:
The Relative Strength Index (RSI) has declined to 32, approaching oversold territory. This could provide an opportunity for buyers to regain control, especially if price stability is confirmed above current levels.
Buy
CLOSEDGBPUSD
End Time
1.33661
Entry Price
1.36200
TP
1.32300
SL
1.32074 -0.00260 -0.20%
1361
Points
Loss
1.32300
SL
1.32295
CLOSING
1.33661
Entry Price
1.36200
TP
On Tuesday evening, U.S. Treasury Secretary Scott Bessent stated that the United States and China will continue discussions aimed at upholding a tariff truce ahead of the deadline set for two weeks from now. The final decision on any potential extension, however, will rest with President Donald Trump. These ongoing trade talks with China remain clouded by uncertainty, which could weigh on the U.S. Dollar (USD) against the Canadian Dollar (CAD).
Meanwhile, the Federal Reserve is widely expected to leave its benchmark interest rate unchanged in the 4.25% to 4.5% range, where it has stood since December. According to the CME’s FedWatch tool, market participants are pricing in a nearly 97% chance of no change in interest rates during the July meeting.
Traders will closely monitor the FOMC’s policy statement and the press conference by Fed Chair Jerome Powell, as they may offer forward guidance on the future path of interest rates. A cautious tone from Fed officials, particularly in light of lingering trade uncertainties, could help contain any short-term downside pressure on the Dollar.
At the same time, rising inflationary pressures continue to erode household purchasing power. A survey by the Confederation of British Industry (CBI) released on Monday showed that retail sales declined for the tenth consecutive month in July. However, the pace of decline eased slightly compared to June, with the index improving to -34 from -46 previously.
“Firms report that elevated pricing pressures — driven largely by rising labor costs — alongside persistent economic uncertainty, are continuing to weigh on household demand. This has been a key contributor to declining sales volumes since October 2024,” CBI analysts noted.
Expectations surrounding domestic interest rates are offering some degree of support, as markets have scaled back their projections for further easing by the Bank of England. While a 25 basis point rate cut for August 7 is nearly fully priced in, market participants are reassessing the extent of additional easing by year-end, with expectations softening by around five basis points over the past week.
Recent CFTC positioning data revealed a notable shift in sentiment toward the British Pound (GBP), as a previously bullish net long position of $2.4 billion has now flattened to a more neutral stance.
Technical Analysis
GBPUSD recently retreated to test the 200-period moving average at 1.3334 on the 12-hour chart, from which it has shown a modest bounce. If the pair can hold above this key level, a renewed upward move could unfold, potentially targeting the 1.3500 area — a region that also coincides with the 100-period moving average.
The Relative Strength Index (RSI) has declined to 32, approaching oversold territory. This could provide an opportunity for buyers to regain control, especially if price stability is confirmed above current levels. However, should this support zone fail to hold and the pair breaks decisively lower, a new bearish wave could drive the price down toward the 1.3200 area.
Trading Recommendations
Trading direction: Buy
Entry price: 1.3358
Target price: 1.3620
Stop loss: 1.3230
Validity: Aug 08, 2025 15:00:00
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