GBP – Head-and-Shoulders Pattern Keeps Downside Pressure Intact

GBP/USD came under clear pressure last week before recovering on Friday to finish near 1.34. Better-than-expected UK retail sales data provided the late support. On Thursday the Bank of England voted 6–3 to keep the Bank Rate at 3.75%, as expected. Governor Bailey warned that persistent Middle East conflict could force tighter policy. The MPC noted that upside risks to inflation are greater than in July and that indirect CPI effects may be delayed rather than diminished; the Bank stands ready to act if necessary.

Technically, the pair has broken below the 50-day moving average and displays a head-and-shoulders topping formation, cautioning that further downside extension remains possible this week. RSI and stochastic indicators continue to trend lower, reinforcing the short-term soft bias. Immediate support is seen at 1.3330, followed by the 28 July low of 1.3273 and the 1.32 level, with the critical 1.30 handle last defended in November as the key longer-term floor. Resistance is located at the 250-day average 1.3420 and the 25-day average 1.3530, with stronger barriers at 1.3650 and then 1.38 toward the January high of 1.3867.

Forecast range:
Resistance: 1.3420 – 1.3530* – 1.3650* – 1.3800 – 1.3867  
Support: 1.3300 – 1.3273 – 1.3200 – 1.3000
 

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