On Tuesday, GBP/USD displayed softer momentum in the early European session after reaching a three-year high of 1.3592. A surge fueled by stronger-than-expected CPI inflation and business PMI figures met resistance near the 1.3590 mark, suggesting a possible slowdown.

Market Indicators and Technical Analysis

Both the RSI and stochastic oscillator are nearing overbought conditions, possibly indicating a near-term pullback. The price action reflects complicated interactions between fiscal data, technical indicators, and market psychology.

Elsewhere, EUR/USD has seen a decline below 1.1350 following positive US confidence data. Similarly, GBP/USD approaches 1.3500 amid robust US data, while gold struggles to hover around $3,300 due to improving market sentiments and a stronger dollar.

In the cryptocurrency arena, Bitcoin has reclaimed $109,000, with its value being influenced by the highly anticipated Bitcoin 2025 Conference. Germany’s DAX index is gradually gaining relevance as a strategic choice for global portfolios amid shifts away from US policy risks.

We’ve seen GBP/USD trim back from its multi-year high near 1.3600, lingering now just under the 1.3550 handle. Although the broader trend still leans bullish on the charts, the recent hesitation in price movement tells a different short-term story. Technical indicators, especially the Relative Strength Index and stochastic oscillator, are both pushing up into territories typically associated with assets being overstretched. That tends to hint at a scenario where either consolidation or a dip could take shape before another push higher is considered.

Earlier in the week, the pair benefitted from dollar softness, triggered largely by nervousness around US fiscal data. With the Memorial Day closure, however, liquidity dried up, muting any further major swings and leaving the pair without a clear catalyst into mid-week. It’s often during such lulls that markets become vulnerable to sharp re-pricing when trades re-enter with volume.

Us Data and Global Currency Impacts

Tuesday’s brief rally towards 1.3592 was impressive at first glance. It was underpinned by firm UK CPI figures and upbeat business PMIs, but the failure to clear 1.3590 decisively warns that current buyers may already be stretched. Attempts to force a breakout past resistance have instead been met by selling pressure. When momentum readings are already elevated, it’s not uncommon to see profit-taking or even short positioning emerge in anticipation of a pullback.

US data has again been the deciding factor globally. Confidence readings out of the US have lifted the dollar across multiple pairs. This puts pressure on GBP as we move closer to 1.3500—no longer just a round number but a psychological barrier many will watch. If we see another batch of strong American releases—without matching strength from the UK side—then it’s very likely we’ll revisit and test that level sooner rather than later.

In parallel, the euro has slipped under 1.1350 after that confidence print, adding weight to the current strength of the greenback. This pattern—a stronger dollar exerting downward pressure across multiple currencies—should be factored into near-term pricing assumptions. The broader rhythm, especially when viewed from a futures perspective, gives us better insight into where momentum may go next.

Commodities are also reflecting this improved optimism in North America. Gold, often viewed as a safe haven, has been struggling to hold footing around $3,300. This is a logical response. As yields firm up and risk appetite returns, the interest in holding stagnant assets like gold typically wanes.

When looking at equities, the DAX has continued to attract allocation flows. This isn’t just because of underlying fundamentals, but also due to the rebalancing effect that comes from markets steering away from perceived instability in US policy decisions. While this doesn’t influence sterling directly, we should remember that cross-asset trends impact currency volumes and positioning—particularly in derivative trading.

Cryptocurrencies have returned as a speculative focal point. Bitcoin, rallying past $109,000, has caught attention again. Market participants seem highly responsive to non-macro factors right now, as demonstrated by the buzz surrounding the upcoming Bitcoin 2025 Conference. That said, the impulse remains largely isolated from broader forex movements, albeit with brief spillovers into risk assets during periods of excess volatility.

Over the next few sessions, while the big picture remains intact, how traders position themselves around the 1.3500-1.3600 band could define GBP/USD movement for weeks. We need to watch whether price action around resistance becomes a trigger for short-term selling or a base for another breakout attempt.

There is temptation in chasing momentum, but the technical indicators argue for a more cautious tilt. Short-dated options pricing and forward spreads should be monitored closely as another round of US data is set to land. These metrics will help refine directional bets.

When volatility contracts like this, it’s usually building up to a move—though not always in the direction many expect.

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