GBP\/USD extended its decline into a fourth straight session, trading near 1.3430 in European hours on Tuesday. Price action remains within an ascending channel on the daily chart, keeping the broader technical bias bullish.<\/p>\n
Spot is still above the nine-day and 50-day Exponential Moving Averages (EMAs), with both measures positioned beneath the market and consistent with an underlying uptrend. Momentum indicators are supportive but measured, as the 14-day Relative Strength Index (RSI) sits around 55, while the pair tests nine-day EMA support near 1.3400.<\/p>\n
We advise derivative traders to look for buying opportunities on dips as GBP\/USD tests its critical nine-day EMA support near 1.3400. Because the pair remains comfortably within its ascending channel and above the 50-day EMA, the broader uptrend remains firmly intact. Buying short-term call options near 1.3400 allows us to capture the upside with limited risk.<\/p>\n
With the 14-day Relative Strength Index (RSI) sitting at a steady 55, the market is far from being overbought, leaving plenty of room for upward movement. Historical data shows that when the RSI hovers in this neutral-bullish zone during an uptrend, it often precedes a steady leg higher rather than a sudden reversal. We can utilize bull call spreads to lower premium costs while targeting a return to the recent highs near 1.3500.<\/p>\n
This bullish momentum is heavily supported by the shifting monetary policies in the US and the UK. With the Bank of England holding its key rate steady at 4.5% to combat persistent services inflation, and the Federal Reserve continuing its easing cycle down to 3.75%, the interest rate differential favors the Pound. We should expect this macroeconomic backdrop to keep the downside limited for GBP\/USD in the coming weeks.<\/p>\n
Traders should consider buying August 2026 monthly contracts to give the trade enough time to develop through the upcoming central bank meetings. Maintaining stop-losses on spot positions just below the 50-day EMA, currently near 1.3250, will protect our capital if the ascending channel breaks. This balanced approach allows us to ride the prevailing bullish wave while managing risk against sudden volatility.<\/p>\n\n\n\n