GBP/USD remains unchanged for the second straight day, trading around 1.3460 during Wednesday’s Asian session. The daily chart shows a decrease in bullish bias as the pair moves below the lower boundary of the ascending channel pattern.
The nine-day Exponential Moving Average (EMA) is trending above the 50-day EMA, maintaining a bullish bias. The pair is positioned just under the short-term average but remains well above the medium-term average, indicating ongoing trend support. The 14-day Relative Strength Index (RSI), at 61.0, remains positive and lacks signs of being overbought.
Rebounding Above Nine-Day EMA
Rebounding above the nine-day EMA of 1.3462 could push GBP/USD towards the three-month high of 1.3534 from December 24. Closing above 1.3534 may enable a move toward the upper boundary of the ascending channel around 1.3690.
A retreat below the short-term average and the channel would reveal the 50-day EMA at 1.3351 as the first trend support, reducing upward momentum. A further decline could place downward pressure on GBP/USD to navigate near the eight-month low of 1.3010.
Data shows the British Pound was weakest against the US Dollar today, with various percentage changes against other major currencies. Akhtar Faruqui, a Forex Analyst, is known for detailed market insights from his New Delhi base.
Critical Point Around 13460
We see the GBP/USD pair sitting at a critical point around 1.3460, having slipped just below its recent upward channel. While the underlying trend remains supported by moving averages, this dip is a clear warning sign. For traders, this indecision suggests preparing for a move in either direction in the first weeks of 2026.
Those looking for a rebound should consider buying call options with a strike price above the 1.3534 three-month high. The positive RSI reading of 61.0 shows there is still room for upward movement without the market being overbought. This bullish view is supported by the latest UK inflation data from November 2025, which showed a stubborn 3.8%, forcing the Bank of England to maintain a hawkish stance in its last meeting.
On the other hand, the current weakness could easily escalate, especially since the pound was the day’s weakest performer against the dollar. A move below the 50-day EMA at 1.3351 would be a strong bearish signal, and traders could use put options to profit from a potential slide towards the 1.30 handle. We remember the sharp drops in 2022, reminding us that sentiment on the pound can shift very quickly.
This fundamental divergence is key, as the latest US core PCE inflation reading dipped to 3.0%, leading many to believe the Federal Reserve could cut rates by mid-2026. Given the uncertainty, using options spreads is a prudent way to manage risk while positioning for either a break higher on stubborn UK inflation or a fall lower if US economic strength prevails. The coming weeks’ employment and inflation reports for both countries will likely be the catalyst for the next significant move.
