GBPUSD has reached a new session high, surpassing the 50% midpoint of the July trading range at 1.35764. Earlier attempts to break this level faced sellers, resulting in a drop to 1.3552, slightly below the support at 1.3561.
Buyers regained control, driving the pair back above the midpoint and setting new highs. Close support is now at 1.3561, a level for buyers to maintain upward momentum.
Upcoming Technical Targets
The next target is at 1.35918, with further gains potentially leading to the 61.8% retracement level at 1.36265.
Based on the buying pressure Michalowski highlights, we believe derivative traders should consider bullish strategies. The successful defense of lower levels and the break above the midpoint suggest underlying strength. Purchasing call options with strike prices near the next upside targets could be an effective way to participate in this rally.
This technical momentum is reinforced by recent fundamental data from the United States. The latest US Consumer Price Index for April showed inflation cooled slightly to 3.4% annually, which increases the probability of the Federal Reserve cutting interest rates later this year. A weaker dollar naturally provides a tailwind for the pound, supporting the upward move.
Impact Of Central Bank Policies
From a historical perspective, periods where both the US and UK central banks are signalling future rate cuts often lead to increased volatility. The Bank of England’s recent meeting showed a 7-2 vote to hold rates, indicating that rate cuts are also being considered in the UK. We can use derivatives like call spreads to limit our risk while still targeting the 61.8% retracement level mentioned in the analysis.
We will be watching the 1.3561 level as a critical point for any long positions. As long as the price remains above this swing area, it confirms the buyers are in control as described. A firm break below this support would cause us to exit bullish trades and re-evaluate the market structure.
