The GBP/USD pair is trading at around 1.3010, maintaining positive momentum for four consecutive sessions. The daily chart shows the pair progressing within an ascending channel pattern, suggesting a bullish trend.
The 14-day Relative Strength Index (RSI) is just above 70, indicating strong momentum but also suggesting the pair could be overbought, possibly leading to a correction.
Federal Reserve Policy And Market Sentiment
Sentiment was supported recently after the Federal Reserve maintained its rate cut plans for 2025, with markets anticipating another quarter-point cut in June. However, the Fed adjusted its GDP growth forecast for 2025 to 1.7%, down from 2.1% previously.
Fed Chair Jerome Powell acknowledged risks from trade policies yet remains optimistic that inflation impacts from tariffs are likely to be mild and temporary.
We are seeing the GBP/USD pair maintaining its upward course, with market sentiment favouring sustained gains. The price moving within an ascending channel tells us that buyers continue to show confidence, pushing the pair higher session after session. This pattern typically suggests that demand is outpacing supply, reinforcing the market’s direction unless disrupted by unforeseen circumstances.
The RSI above the 70 level does raise a flag, as it often implies that buying pressure might be reaching a point where sellers could step in. Overbought conditions do not always lead to an immediate pullback, but they do warrant awareness of potential profit-taking or a slowdown in upward momentum. Market participants who have been riding this trend higher should be attentive to any shift in behaviour, particularly if short-term indicators begin to show exhaustion.
Outlook For Traders And Key Considerations
One of the main sources of strength behind the pair has been the Federal Reserve’s stance. Powell and his colleagues have kept the market aligned with expectations that rates could continue to moderate in 2025. The fact that another cut is widely expected for June gives traders a stronger sense of direction. However, the central bank’s downward revision of next year’s GDP growth outlook from 2.1% to 1.7% points to an economy that may not be running as hot as previously thought.
At the same time, Powell’s assessment of trade-related risks offers reassurance. While tariffs can add inflationary pressure, he seems confident that any impact will be temporary rather than structural. This perspective likely contributed to the stability in risk sentiment, as markets prefer certainty over uncertainty when it comes to longer-term economic trends.
With all of this in mind, those engaging in derivative markets should be watching price action carefully. If momentum remains intact, traders seeking continuation patterns may find opportunities within this current channel. However, any sign of exhaustion or correction could invite short-term selling pressure, at least until a firmer base is established again.
