The GBP/USD currency pair has resumed its upward momentum, extending gains from a clearly defined bullish double bottom at the $1.3375 level. In a market heavily influenced by macroeconomic sentiment and technical patterns, the current landscape shows both fundamental and technical alignment favoring the bulls. 

This article by the brokers from Arbitics explores the technical setup, macroeconomic influences, and price action cues that traders should watch as the British Pound gains traction against the US Dollar.

GBP/USD Analysis: Weakening Dollar, Stronger Pound

The US Dollar (USD) has resumed its long-term bearish trajectory, which had paused briefly in late June due to improved US economic data and a cautious tone from the Federal Reserve. However, the greenback has started to weaken once more, a trend visible across the major Forex pairs. 

The DXY (Dollar Index) has been showing signs of renewed softness, reflecting reduced expectations of further rate hikes and persistent uncertainty around US growth resilience.

In contrast, the British Pound (GBP) has maintained a moderate level of relative strength, underpinned by the Bank of England’s hawkish policy stance. Inflation in the UK remains stubbornly high, forcing the central bank to maintain elevated interest rates, thereby supporting the currency. 

While this strength is not extraordinary in absolute terms, it is significant in a context where other currencies are faltering under softer monetary policy.

Double Bottom Technical Structure at $1.3375

From a technical analysis perspective, the GBP/USD chart has printed a textbook double bottom pattern at the $1.3375 price zone. This pattern emerged after a prolonged downtrend, signaling a potential trend reversal. 

The neckline of the double bottom, around the $1.3540–$1.3550 zone, is now the key technical barrier that bulls are trying to overcome.

Following the second low at $1.3375, the price action has been steadily climbing, forming higher lows and higher highs, a classic hallmark of an emerging uptrend. The second bottom was followed by consistent bullish candlesticks, indicating strong buying interest and confirming the reversal thesis.

Key Resistance: $1.3548–$1.3550

As of writing, GBP/USD is hovering just beneath a crucial resistance zone at $1.3548 to $1.3550, which has historical significance. A clean breakout above this level would likely trigger additional momentum buying and attract algorithmic traders who respond to technical breakouts.

The best technical signal for a long trade entry would be two consecutive hourly closes above $1.3550 without long upper wicks, as this would indicate a sustained breakout rather than a false move or liquidity hunt. Traders should be cautious of false breakouts, especially during low liquidity hours or as New York trading begins, which can introduce bearish reversals due to fresh institutional order flows.

Price Action Considerations

Trading GBP/USD often rewards those who align their entries with momentum-driven breakouts. Given the current market structure, buying the breakout above $1.3550, provided confirmation through candle closes, is a logical approach. 

This would suggest a continuation toward next resistance levels at $1.3600 and possibly $1.3675 if bullish sentiment remains intact.

Short trades at this stage appear less favorable unless the price sharply rejects $1.3550 and drops below $1.3480 support, forming a bearish engulfing pattern or similar reversal signal. Until such a pattern appears, long bias remains preferred.

Risk Factors to Monitor

Despite the bullish structure, several risk factors could disrupt the upward move:

• US economic data releases such as GDP, core PCE, or non-farm payrolls can shift expectations around Fed policy, leading to sudden USD strength.
• Bank of England commentary or unexpected shifts in UK inflation projections could reduce expectations for further rate hikes, weakening the Pound.
• Global risk sentiment, especially in equities and commodities, can influence risk-on or risk-off flows that impact GBP/USD indirectly.

Traders should monitor macro news in tandem with technical indicators to avoid being caught on the wrong side of volatility.

Conclusion

The GBP/USD pair is showing renewed bullish strength as it rises from a technically significant double bottom at $1.3375. The weakening US Dollar, solid UK rates backdrop, and improving chart structure make this a compelling setup for bullish continuation. 

However, confirmation above $1.3550 is essential before entering long positions. Traders should remain alert during the New York session open, where increased volatility could produce deceptive price action.

GBP/USD is likely to continue rising, but disciplined execution and proper risk management remain crucial in navigating this technical setup.