Will the Loss of Key Support Trigger a Bullish Rebound?

Summary:

Amid escalating Middle East risks and policy uncertainties, the pound has fallen below the 1.3300 threshold.

Buy GBPUSD

EXP

Trading

1.33053

ENTRY

1.41000

TGT

1.30010

1.33693 -0.00019 -0.01%

Point

Flat

1.30010

CLOSING

1.33053

ENTRY

1.41000

TGT

Fundamentals

On Tuesday, the GBPUSD accelerated its decline ahead of the New York session, breaking below the 1.3300 psychological level and poised to hit a three-month low. The core driver behind the currency's weakness was the renewed escalation of geopolitical risks. The ongoing escalation of the Iran conflict pushed oil prices higher, significantly boosting global risk aversion. The dollar strengthened as capital flowed back into the currency, while the pound, with its relatively higher yield profile, came under pressure.

From a fundamental perspective, the Middle East situation has altered expectations for the UK's monetary policy path by transmitting inflationary pressures through energy prices. Previously, as food and commodity price increases slowed, markets had anticipated that the UK's headline inflation rate would likely fall back toward the 2% target in April, creating conditions for policy easing. However, the renewed rise in energy prices may disrupt this trajectory.

Against this backdrop, the Bank of England may opt to delay interest rate cuts in March. Policy makers may need to wait for clearer signs of slowing inflation in the services sector to offset input inflation pressures stemming from rising energy costs. Meanwhile, as a net energy importer, the UK will see its trade deficit widen amid persistently higher oil prices, weakening structural demand for the pound. To avoid further currency depreciation and amplified inflationary pressures, the central bank may adopt a more cautious tone in its policy communications.

From a timing perspective, macroeconomic data released between now and the March 19 monetary policy meeting will be particularly crucial. This Thursday will see the publication of the Bank of England's Survey of Professional Forecasters, with its inflation expectations indicator holding significant reference value. Additionally, the latest UK Labour Market Report will be released on the morning of the March policy decision day (the central bank will receive the data in advance), while next week's preliminary February CPI figures will also provide important guidance for the policy path.

Overall, the pound currently faces dual pressures from rising external risk premiums and internal policy uncertainties. Should risk aversion continue to dominate the market and inflation data fail to show a significant decline, the GBPUSD may remain weak in the near term.

Will the Loss of Key Support Trigger a Bullish Rebound?_1

Technical Analysis

The GBPUSD is showing a downward bias in intraday trading, with the decline from 1.3867 continuing. The break below the structural support level at 1.3342 indicates that the pair has begun to retrace gains made since 1.2099. Under these circumstances, prices may extend lower toward the demand zone at 1.3222. For now, as long as the 1.3574 resistance level holds, any rebound will maintain its downside risk.

However, from a trading perspective, stabilization in demand zones may drive the market to continue its upward trend. Positioning is key.

Trading Recommendations

Trading Direction: Buy

Entry Price: 1.3230

Target Price: 1.4100

Stop Loss: 1.3001

Valid Until: April 2, 2026 23:55:00

Support: 1.3226, 1.3180, 1.3138

Resistance: 1.3338, 1.3445, 1.3575

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

2255

Win Rate

60.11%

P/L Ratio

0.63

Focus on

WTI, XAUUSD, GBPJPY

Related Analysis

Safe-haven Dollar Versus High-oil-price Canadian Dollar: Market Faces Directional Dilemma

PENDING