Bullish Setup Takes Shape as GBPUSD Holds Critical Floor

Forex

Economic

Summary:

This demand zone is acting as a springboard, suggesting that the bulls may be preparing to retake control with a target toward the 1.3567 resistance handle.

BUY GBPUSD

Close Time

CLOSED

1.34194

Entry Price

1.35670

1.32800

1.33080 -0.00951 -0.71%

139.4

Pips

Loss

1.32800

Exit Price

1.34194

Entry Price

1.35670

In the United Kingdom, recent local election results across Northern England have significantly undermined Prime Minister Keir Starmer’s standing within the Labour Party. This political erosion has sparked intense speculation regarding a potential leadership challenge. Simultaneously, Bank of England (BoE) policymaker Alan Taylor highlighted the complexities of quantifying the economic fallout from the escalating Middle East conflict. Consequently, the probability of a BoE rate cut during the March 19 meeting has plummeted from 84% to just 48%, according to Prime Market Terminal.

Furthermore, the unexpected success of the Green Party has introduced a fresh layer of fiscal anxiety. Investors are increasingly concerned that this victory could pull the government toward more aggressive left-wing spending policies, a sentiment that is currently driving up the risk premium on UK Gilts.

Global risk appetite experienced a sharp contraction over the weekend following reports of a coordinated military operation by the United States and Israel against Iranian targets. This geopolitical escalation has triggered a flight to safety, markedly increasing demand for the U.S. Dollar. In direct retaliation, Iran deployed a series of missile and drone strikes against U.S. military installations across various Gulf nations, framed as a "vengeance strike" following the death of Iran’s Supreme Leader, Ayatollah Ali Khamenei.

President Donald Trump recently characterized the military operations as being "ahead of schedule," asserting in a recent interview that the administration is "hitting them hard." While initial estimates projected a four-week conflict, the President suggested the military is currently outperforming that timeline.

On the data front, the Institute for Supply Management (ISM) reported that the Manufacturing PMI remained in expansionary territory for the second consecutive month in February. However, a more granular analysis reveals a nuanced landscape: headline business activity edged down from 52.6 to 52.4. Most significantly, the Prices Paid subcomponent surged to a three-and-a-half-year high, indicating that recently implemented import tariffs are substantially inflating input costs for domestic manufacturers.

This inflationary pressure is met by a remarkably resilient U.S. labor market. The latest Initial Jobless Claims report showed that 212,000 individuals filed for benefits—slightly up from the previous 208,000 but still outperforming the 215,000 market consensus. Combined with Continuing Jobless Claims contracting to 1.833 million, this structural strength provides the Federal Reserve with the necessary "breathing room" to maintain its patient, data-dependent policy stance. Bullish Setup Takes Shape as GBPUSD Holds Critical Floor_1

Bullish Setup Takes Shape as GBPUSD Holds Critical Floor_1

Technical Analysis

From a technical perspective, GBP/USD has successfully reached the primary support level at 1.3366, where price action has begun to exhibit a definitive bullish rejection. This demand zone is acting as a springboard, suggesting that the bulls may be preparing to retake control with a target toward the 1.3567 resistance handle.

This target area is of high technical significance as it represents a major confluence of resistance. On the 4-hour (H4) chart, the 100 and 200-period Moving Averages (MAs) are converging near 1.3668 and 1.3564, respectively. Furthermore, this zone aligns precisely with the 0.618 Fibonacci retracement level. Such a concentration of technical barriers suggests that any recovery rally will likely face a significant test in this region.

Our momentum analysis reinforces the possibility of a bullish pivot. The RSI recently plummeted to the 31 level, entering deeply oversold territory. Historically, such extremes often precede a tactical short-covering rally or a broader reversal as sellers reach exhaustion. Simultaneously, the MACD signal lines are hovering marginally below the neutral threshold, but the histogram is printing progressively smaller bearish bars.

The current MACD formation suggests a "momentum fade." If the histogram transitions into positive territory, it would likely propel the signal lines back above the zero-line, confirming the start of the anticipated bullish impulse. Given the confluence of oversold oscillators and structural support, buy-side positions are increasingly favored in this vicinity.

Trading Recommendations

Trading direction: Buy

Entry price: 1.3417

Target price: 1.3567

Stop loss: 1.3280

Validity: Mar 13, 2026 15:00:00

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Bullish Setup Takes Shape as GBPUSD Holds Critical Floor

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