The GBP/USD currency pair has continued to exhibit bullish behavior, reinforcing the broader uptrend bias that has been forming over the past few weeks. On Friday, the British pound rallied against the US dollar, albeit during a low-volume session due to the Independence Day holiday in the United States. Aurudium presents a detailed exploration of this issue, courtesy of their experienced brokers.

With most American traders away from their desks, the market was primarily driven by Asian and European trading desks, suggesting that price action should be interpreted cautiously. However, despite the holiday-induced liquidity drop, the broader technical landscape remains strongly supportive of higher prices in this major forex pair.  

Light Volume, But Strong Directional Clues

Although Friday’s movement was during a thin trading session, it extended the pair’s ongoing bullish momentum. The limited participation doesn’t nullify the directional significance. 

Instead, traders should look at the candlestick patterns over the last two weeks to determine the prevailing trend. The recent series of higher lows and attempts to push above resistance zones underscores a clear bullish structure, one that is supported by strong fundamentals and technical signals.

Key Support Zone

One of the most technically relevant zones in the short term is between 1.3550 and 1.3500. This support region is critical because of the aggressive sell-off witnessed last Wednesday, which failed to sustain any downward momentum and quickly found buying interest. 

The 1.3550 level has historically acted as resistance, and its transformation into support reinforces its technical importance.

Traders should also note that the 50-day Exponential Moving Average (EMA) lies just beneath this zone, currently positioned near 1.3460. This confluence of technical support strengthens the case for bullish entries on any retracement. If price action dips toward this area, it could serve as a low-risk buying opportunity, especially in the context of the prevailing uptrend.

Upside Potential

If buyers maintain control, a break above the 1.38 level could trigger a more aggressive bullish breakout. This level acts as a short-term resistance barrier, and a daily close above it would likely attract momentum traders. 

Should this occur, the next major psychological level is the 1.40 handle, a large, round number that typically garners increased attention from both retail and institutional traders.

The 1.40 level is not only important due to its psychological weight but also because it aligns with several historical pivot points. If GBP/USD makes a sustained push toward that region, expect elevated volatility, increased volume, and potentially broader shifts in market sentiment regarding the British pound.

Macro Environment Favors the Pound

Beyond the charts, the broader macroeconomic context supports further sterling strength. One of the key themes impacting the pair is the selloff in US Treasuries, which reflects declining confidence in US fixed-income assets. 

This bond market weakness suggests that capital flows are shifting away from the US, likely in search of more attractive yields or currency strength elsewhere, including the UK.

Additionally, the Bank of England (BoE) remains relatively hawkish, especially when compared to the more cautious tone of the Federal Reserve. The monetary policy divergence between these two major central banks adds another layer of support to the GBP/USD bullish narrative.

Technical Indicators Reinforce Bullish Bias

A variety of technical indicators also support the bullish outlook:

• The Relative Strength Index (RSI) remains above 50 on the daily chart, indicating positive momentum.
• The 50-day EMA continues to slope upwards, reflecting underlying strength in the pair.
• The MACD histogram remains in positive territory, suggesting ongoing upward price pressure.

Each of these tools confirms that while temporary pullbacks may occur, the trend-following strategy remains valid. Traders should continue to buy dips, especially as long as the price remains above 1.3500.

Watch for Consolidation Before Breakout

As GBP/USD approaches the 1.38 resistance area, traders should also be prepared for a period of consolidation. It is not uncommon for major currency pairs to stall near critical resistance zones before gathering enough momentum to break out. 

This could lead to a short-term sideways trading range between 1.3550 and 1.38, as market participants assess incoming economic data, central bank commentary, or changes in risk sentiment. Such consolidation should not be mistaken for weakness; it often serves as a base-building phase that precedes strong directional moves.

Final Thoughts

Despite the light volume on Friday due to the US holiday, the GBP/USD remains well-positioned to continue its upward trajectory. With strong support levels holding firm and upside resistance within reach, the technical and macro environment both align in favor of the British pound. 

Traders should remain cautious of sudden reversals, particularly during low-liquidity sessions, but the overall trend remains constructive for bulls. As long as GBP/USD maintains key support above 1.3500, the outlook continues to favor further strength, potentially leading to a test of the 1.40 level in the coming weeks.