What Happened
The British Pound (GBP/USD) came under renewed selling pressure after UK Gilt yields surged to multi-year highs, driven by fears of looser fiscal policy under a more left-wing Labour leadership. Strategists at Societe Generale note the Gilt selloff has partially eased, offering the Pound a temporary reprieve, though political uncertainty continues to cloud the outlook.
Key Levels
Support:
- 1.3150 โ near-term support; a break here opens the door to further downside
- 1.3000 โ major psychological support and medium-term floor
Resistance:
- 1.3300 โ immediate resistance; bulls need a clear close above this level
- 1.3430 โ stronger ceiling where sellers have previously stepped in
Technical Picture
GBP/USD is trading in a cautious range, struggling to reclaim its 50-day moving average (~1.3280). The broader trend remains modestly bullish from the 2025 lows, but the recent Gilt-driven volatility has introduced a bearish near-term bias. RSI sits around 48, indicating neutral momentum with a slight downward lean โ not yet oversold, suggesting more downside is possible before a meaningful bounce.
What Traders Are Watching
- 1.3150: A daily close below this level would signal a more serious breakdown and likely accelerate selling toward 1.3000.
- UK 30-year Gilt yields: If yields resume their climb above recent multi-year highs, expect fresh GBP weakness. Stabilisation or a pullback in yields would support a recovery toward 1.3300.
- Labour fiscal headlines: Any further signals of looser spending rules could reignite Gilt selling and drag GBP lower.
Bias
Bearish โ Political uncertainty and elevated Gilt yields are headwinds for the Pound. Until fiscal risks are clearly off the table, rallies are likely to be sold into. The 1.3300 resistance level is the key line in the sand for bulls.
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