Bulls Still in Control, but Upside Safety Margin Has Narrowed Significantly

Summary:

GBPUSD is consolidating near multi-year highs, while the US dollar remains under pressure amid “sell-America” trade sentiment, the Fed’s policy outlook, and elevated political uncertainty. On the technical front, a failed short-term inverse head-and-shoulders pattern signals rising pullback risk at elevated levels.

Sell GBPUSD

End Time

CLOSED

1.38087

ENTRY

1.35000

TGT

1.39990

-- -- --

1506

Points

Profit

1.35000

TGT

1.36581

CLOSING

1.38087

ENTRY

1.39990

Fundamentals

GBPUSD hovered around 1.3834 on Thursday, close to its highest level since August 2021. While sterling itself lacks fresh bullish catalysts, rising volatility in the US dollar has continued to provide support for the pair.

The recent weakness in the dollar mainly reflects a market repricing of US policy and capital flows. US Treasury Secretary Scott Bessent stated that Washington has no plans to intervene in the FX market by selling the Japanese yen. The remark was interpreted as a restrained stance on exchange-rate issues, reinforcing existing “sell-America” trade sentiment and weighing further on the dollar.

Meanwhile, the Fed left interest rates unchanged at its latest meeting and slightly upgraded its economic outlook, reinforcing expectations of an extended rate pause. However, markets have not fully embraced a hawkish interpretation. Investors widely believe that if former President Trump were to replace Jerome Powell with a more dovish Fed chair in the future, US monetary policy could still re-enter an easing cycle. This medium- to long-term uncertainty continues to act as a potential drag on the dollar.

With the Fed temporarily on hold, market attention has shifted to the Bank of England (BoE). Markets broadly expect the BoE to keep its benchmark rate unchanged at 3.75% at next week’s meeting. This expectation is supported by recent UK inflation data — December inflation rose to 3.4%, while retail sales figures pointed to renewed price pressures, leaving the BoE with little room to pivot decisively toward easing in the near term.

Looking ahead, while sterling fundamentals have not deteriorated materially, the prior rapid rally has significantly increased short-term correction risks. Combined with signals from short-cycle price structures, GBPUSD appears more likely to be transitioning from high-level consolidation into a pullback phase. If the adjustment extends, the pair may retreat toward the 1.3500 area, which marks the base of the previous upswing.

Bulls Still in Control, but Upside Safety Margin Has Narrowed Significantly_1

Technical Analysis

From a technical perspective, intraday price action in GBPUSD is broadly neutral. However, below the interim high at 1.3867, signs of a failed short-term inverse head-and-shoulders pattern have emerged, suggesting that bullish momentum is fading quickly and downside risks are building.

On the downside, initial support is located at 1.3641. A break below this level could open the door for a deeper pullback toward the 1.3500 zone, corresponding to the key origin of the prior rally.

Conversely, if 1.3641 holds and caps downside pressure, bulls may attempt to retest resistance at 1.3901. A decisive break above 1.3901 would shift the medium-term target higher toward the 1.4246–1.4248 area, near a major structural resistance zone.

Overall, based on current structure and momentum, we lean toward a scenario in which a break below 1.3641 triggers a deeper corrective move.

Trade Recommendations

Trade Direction: Sell

Entry Price: 1.3825

Target Price: 1.3500

Stop Loss: 1.3999

Valid Until: February 24, 2026 23:55:00

Support: 1.3788 / 1.3749 / 1.3641

Resistance: 1.3867 / 1.3893 / 1.3916

Risk Warnings and Investment Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading with strategies. Following any strategies or investment methodologies is the potential for loss. The content on the site is being provided by our contributors and analysts for information purposes only. You alone are solely responsible for determining whether any trading assets, or securities, or strategy, or any other product is suitable for you based on your investment objectives and financial situation.

Quick Access to 7x24

Quick Access to More Editor-selected Real-time News

Exclusive video for free

FastBull project team is dedicated to create exclusive videos

Real-time Quotes

View more faster market quotes

More comprehensive macro data and economic indicators

Members have access to entire historical data, guests can only view the last 4 years

Member-only Database

Comprehensive forex, commodity, and equity market data

Eva Chen

Analysts

Master of Economics, 8 years in the financial industry, CFA holder, joined HSBC (Hong Kong) Bank in 2013 after graduating from the University of California, USA in the Investment Research and Markets Department. With years of financial market experience and trading experience, having provided excellent investment advice to many brokerages, entity derivatives importers and clients in Greater China.

Rank

Articless

2209

Win Rate

59.54%

P/L Ratio

0.63

Focus on

WTI, XAUUSD, GBPJPY

Related Analysis

UK Manufacturing Data Boosts the Pound, Japan's Inflation Concerns Linger

PENDING