Strong Rejection Signals Bearish Move Could Persist Over the Medium Term

Manuel

Forex

Economic

Summary:

This signal suggests a rapid loss of strength by buyers, increasing the probability of a prolonged downward move.

SELL GBPUSD

EXP

PENDING

1.33500

Entry Price

1.31440

1.34800

1.33138 +0.00008 +0.01%

Pips

PENDING

1.31440

Exit Price

1.33500

Entry Price

1.34800

Market expectations continue to indicate that the Bank of England (BoE) will maintain the Bank Rate at 3.75% throughout 2026, reflecting the perception that policymakers will need more time to consolidate the disinflation process and ensure price pressures return sustainably to their target.

In the United Kingdom, focus also remains centered on the new administration led by Andy Burnham. The appointment of John Healey as Chancellor of the Exchequer initially generated some caution among investors due to doubts regarding the new government's fiscal direction. However, Burnham has reiterated his commitment to current fiscal rules, though he maintains the intention to use available budgetary space to advance his economic priorities.

The latest British economic data have helped reinforce confidence in the growth outlook. The ILO unemployment rate held steady at 4.9% during the three months to May, defying forecasts of an increase to 5.0%. Likewise, jobless claims rose much less than expected, and the previous month's data were revised lower. Taken together, these figures reflect a more resilient labor market than anticipated and reduce pressure on the BoE to initiate monetary easing in the short term.

In the United States, initial jobless claims fell to 187,000 for the week ending July 18, coming in below market expectations. These data points reinforced the perception that the U.S. labor market continues to show strength, supporting both the dollar and Treasury bond yields.

The combination of a solid labor market and the recent rebound in energy prices has led investors to reconsider the monetary policy outlook for the Federal Reserve. Swap markets reflect a higher probability of a rate hike at the July 29 meeting, with bets increasing significantly in recent days.

Meanwhile, geopolitical tensions continue to dominate the energy market landscape. Reports from Israeli media suggest that U.S. President Donald Trump might be evaluating a larger-scale military operation against Iran, while Israel remains awaiting a decision regarding a potential expansion of military actions in the region.

The situation has been exacerbated by fresh threats to major energy transit routes. Adding to existing risks in the Strait of Hormuz, tensions have emerged in the Bab el-Mandeb Strait after the Yemeni group Ansar Allah attacked two Saudi oil tankers in the Red Sea.

Following these events, Trump warned that any renewed aggression would trigger a forceful response from the United States. The president held Iran accountable for the actions of Ansar Allah and affirmed that both Tehran and the Yemeni group would face significant military consequences in the event of further escalation. Strong Rejection Signals Bearish Move Could Persist Over the Medium Term_1

Strong Rejection Signals Bearish Move Could Persist Over the Medium Term_1

Technical Analysis

GBPUSD rejected the 1.3539 level decisively, a relevant area where a price gap formed back on May 12. As a result, this level now consolidates as local resistance, after the pair initiated a downward move upon encountering selling pressure in that area.

Furthermore, the price recently closed decisively below the 100 and 200-period moving averages, currently located at 1.3397 and 1.3396, respectively. The proximity between both indicators suggests that this region represents the average market price; therefore, further confirmation below these levels could accelerate bearish momentum and open the door for an extension of the decline toward the 1.3144 area.

Regarding technical indicators, the RSI recently reached the 66 level, approaching overbought territory. However, the divergence displayed by this indicator is more relevant: while at the previous high the RSI recorded lower readings, on this occasion it reached higher levels despite the price printing lower highs. This signal suggests a rapid loss of strength by buyers, increasing the probability of a prolonged downward move.

For its part, the MACD is already displaying a histogram in negative territory, while its signal lines are close to completing a bearish crossover. Should this scenario be confirmed, it would reinforce the outlook for continuity in the downward trend over the medium term.

Trading Recommendations

Trading direction: Sell

Entry price: 1.3350

Target price: 1.3144

Stop loss: 1.3480

Validity: Aug 05, 2026 15:00:00

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Strong Rejection Signals Bearish Move Could Persist Over the Medium Term

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