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Double Top Formation Signals Potential Bearish Shift in GBPUSD
Central Bank
Economic
Summary:
Price action on the daily chart has confirmed rejection from this area, with a series of bearish candlesticks hinting at a potential reversal.
Sell
TradingGBPUSD
EXP
1.33192
Entry Price
1.28680
TP
1.35200
SL
1.32808 +0.00045 +0.03%
0
Point
Flat
1.28680
TP
CLOSING
1.33192
Entry Price
1.35200
SL
Economic data released by the U.S. Department of Commerce on Thursday revealed that the American economy unexpectedly contracted at an annualized rate of 0.3% during the first quarter of 2025. This disappointing result fell short of market expectations for a 0.4% increase and marked a sharp slowdown from the previous quarter’s 2.4% expansion. The weaker growth print arrives at a time of mounting uncertainty surrounding the direction of U.S. trade policy under President Donald Trump.
Speaking on Wednesday, Trump acknowledged that the economic impact of current policies may take time to materialize. He also deflected blame for the stock market's recent performance, pointing fingers at former President Joe Biden. The comments came just days before several high-impact data releases, including the latest U.S. jobless claims, final S&P Global manufacturing PMI, and the ISM Manufacturing Index—all set to be released later Thursday.
However, investor attention remains firmly fixed on Friday’s Nonfarm Payrolls (NFP) report, where consensus forecasts suggest the U.S. economy likely added 130,000 jobs in April. The labor market data could provide further clues about the underlying health of the economy and shape expectations for future monetary policy moves.
Speaking at the “Investing in America” event at the White House, President Trump also took aim at the Federal Reserve, expressing frustration with the current level of interest rates. He hinted at dissatisfaction with at least one Fed official—without naming names—and reiterated his belief that rates should be lower. “I understand interest much better than Powell,” Trump claimed, while also threatening pharmaceutical companies with future tariff barriers if they do not meet certain conditions.
Meanwhile, fresh data from the Bureau of Economic Analysis (BEA) indicated that the Fed’s preferred inflation gauge—the Core Personal Consumption Expenditures (Core PCE) Index—rose by 2.6% year-over-year in March, in line with expectations but down from February’s 3% increase.
Labor market signals were also weaker than expected, as ADP’s National Employment Report showed that private sector employers added only 62,000 jobs in April, significantly below both the forecast of 115,000 and the prior month’s figure of 147,000.
Across the Atlantic, Bank of England (BoE) Governor Andrew Bailey last week highlighted the potential economic risks posed by global trade tensions. Speaking on the sidelines of the International Monetary Fund’s (IMF) Spring Meetings in Washington, Bailey urged policymakers to take the threat to global growth seriously. “We must consider the risk of a trade war very carefully,” he warned.
This week, the UK economic calendar is notably quiet, leaving the British pound more exposed to global sentiment and external developments. The sterling has remained relatively supported against the U.S. dollar amid heightened uncertainty surrounding the ongoing U.S.–China trade conflict. The United States has expressed a desire for China to return to the negotiating table, citing the imbalance in bilateral trade. “It’s really up to China to de-escalate—they sell us five times more than we sell them,” said Bessent in a CNBC Squawk Box interview on Monday.
Technical Analysis
The GBP/USD pair has encountered significant resistance near the 1.3431 level, marking a retest of a previous high and forming what now appears to be a textbook double top pattern—a bearish formation. Price action on the daily chart has confirmed rejection from this area, with a series of bearish candlesticks hinting at a potential reversal. The pair has since entered a phase of consolidation, but failure to break above this resistance suggests the next directional move could be downward.
A deeper decline could target the next key support zone around 1.2868. Notably, this level is reinforced by the 100- and 200-period moving averages, currently aligned at 1.27226 and 1.28437, respectively. These moving averages often act as natural magnets for price, reinforcing the likelihood of further downside movement in the near term.
However, should bullish momentum regain control and price breaks decisively above 1.3431, the next upside objective would likely be the psychological resistance at 1.3500—a level that could attract fresh buying interest and potentially signal the continuation of the broader uptrend.
Trading Recommendations
Trading direction: Sell
Entry price: 1.3320
Target price: 1.2868
Stop loss: 1.3520
Validity: May 09, 2025 15:00:00
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