Rejection at Key Support Would Provide Buying Opportunities

Forex

Economic

Summary:

This decline could find support as it draws near the 1.3340 level, a zone where price rejected upward on two previous occasions.

BUY GBPUSD

EXP

PENDING

1.33400

Entry Price

1.34500

1.32900

1.33826 +0.00094 +0.07%

Pips

PENDING

1.32900

Exit Price

1.33400

Entry Price

1.34500

In the United Kingdom, John Healey was appointed as the new Chancellor of the Exchequer, replacing Rachel Reeves following Andy Burnham's arrival as Prime Minister. Although Burnham reiterated his commitment to the existing fiscal rules, he also noted that he will utilize any available budgetary leeway to advance his government's priorities. The British pound reacted with mild weakness amid initial uncertainty surrounding the administration's future fiscal direction.

On the economic front, recent UK labor market figures displayed greater resilience than expected, reducing pressure on the Bank of England (BoE) to ease its monetary policy in the short term. Nonetheless, investor focus now shifts to upcoming inflation data releases, which could offer fresh signals regarding the timing of future central bank moves.

Meanwhile, geopolitical tensions in the Middle East continue to intensify. U.S. President Donald Trump stated that Washington could expand its military campaign against Iran, including potential strikes on strategic facilities such as the Pickaxe Mountain underground complex. Additionally, he ruled out the possibility of immediate negotiations with Tehran and confirmed the continuation of current pressure measures.

The Iranian response was swift. The country's military high command warned that any attack on its nuclear facilities would prompt an expansion of the conflict and retaliatory measures against U.S. and allied interests throughout the region. In the same vein, Iranian state media indicated that such an offensive could trigger a broader escalation across the Middle East.

Adding to this backdrop, Yemen's Iran-aligned Houthis announced a naval blockade against Saudi Arabia. This situation continues to support oil prices, as markets fear further disruptions to the global energy supply. Rising crude prices have also reinforced inflation concerns, contributing to expectations that U.S. interest rates will remain elevated for longer.

Regarding U.S. economic indicators, the four-week moving average of the ADP employment change fell to 16.5k positions from the 19.25k recorded previously, suggesting a gradual moderation in the labor market. With a light economic calendar in the near term, attention shifts to initial jobless claims scheduled for Thursday, one of the last relevant data points ahead of the Federal Reserve's monetary policy meeting on July 29.

Elsewhere, the yield on the U.S. 10-year Treasury note advanced by nearly 3.5 basis points to 4.63%. Rising yields typically act as a headwind for gold, as they increase the relative appeal of interest-bearing assets over the non-yielding precious metal. Rejection at Key Support Would Provide Buying Opportunities_1

Rejection at Key Support Would Provide Buying Opportunities_1

Technical Analysis

GBPUSD reacted downward after breaking below the 200-period moving average at the start of the European session. This moving average currently sits at 1.3410, while the 100-period moving average is located at 1.3432. This decline could find support as it draws near the 1.3340 level, a zone where price rejected upward on two previous occasions. If this pattern repeats, we could find bullish opportunities as price approaches this area. Meanwhile, the upside target lies where resistance sits around the 1.3450 psychological level, which also aligns with the 0.50 Fibonacci retracement, adding technical weight to a potential pullback toward this zone.

Looking at the oscillators, the RSI dropped to the 21 level, clearly entering oversold territory, which suggests bulls could begin to retake control of the price action. On the other hand, the MACD displays a bearish histogram that is losing depth, though the signal lines remain deeply embedded in negative territory. Consequently, another leg lower toward the key zone cannot be ruled out before encountering a solid upward reaction.

Trading Recommendations

Trading direction: Buy

Entry price: 1.3340

Target price: 1.3450

Stop loss: 1.3290

Validity: Jul 31, 2026 15:00:00

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Rejection at Key Support Would Provide Buying Opportunities

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