GBPUSD in the Spotlight Amid UK–US Trade Framework

Traders will be closely watching Friday’s release of Canada’s Employment Change data, a high-impact event that could drive volatility in CAD pairs. Against this backdrop, GBPUSD remains in focus as recent price action has shown signs of both resilience and potential weakness. Following a strong rebound from April lows, the pair now faces a critical test amid mixed technical signals and a shifting macroeconomic landscape shaped by recent central bank decisions and evolving trade dynamics between major economies.

High Impact Economic Events

Friday 17:30 (GMT+3) – Canada: Employment Change (CAD)

Chart Analysis

Since reaching a low of 1.27073 on April 7, GBPUSD has staged a strong recovery, initially triggered by the emergence of a Bullish Harami pattern—an established candlestick formation signaling potential reversal. This was followed by a series of long bullish candles, underscoring sustained buying interest that propelled the pair to a recent high of 1.34431.

However, the rally has since faltered with the appearance of a bearish failure swing. The recent peak at 1.34019 failed to surpass the previous high, and the subsequent break below 1.32458 suggests a weakening bullish momentum and raises the prospect of a deeper retracement.

Technically, the pair has slipped below the 20-period Exponential Moving Average (EMA), though it continues to trade above the 50-period EMA. Notably, the 20-period EMA has yet to cross below the 50-period EMA, indicating that a full bearish crossover has not materialized. Momentum indicators present a mixed picture: the Momentum Oscillator has dipped below the 100 threshold, signaling increasing downside pressure, while the Relative Strength Index (RSI) remains above the neutral 50 level, suggesting bullish bias.

Taken together, a clear and sustained break below 1.32458 would reinforce a bearish shift in structure. However, confirmation from momentum and trend-following indicators will be essential to validate the move.

Key Resistance Levels

If buyers maintain control of the market, traders may shift their focus to the following four potential resistance levels:

1.33198: The first level of resistance is projected at 1.33198, which aligns with the weekly Pivot Point, PP, estimated using the standard methodology.

1.34431: The second price target is seen at 1.34431, corresponding to the peak from April 29.

1.35047: The third upside target is noted at 1.35047, corresponding to the weekly resistance, R2, calculated using the standard Pivot Points methodology.

1.35664: An additional upside target is determined at 1.35664, reflecting the weekly resistance, R3, calculated using the standard Pivot Points methodology.

Key Support Levels

If sellers take control of the market, traders may focus on the following four key support levels:

1.32458: The initial support level is seen at 1.32458, representing the peak marked on May 5.

1.31493: The second support level is positioned at 1.31493, aligning with the 161.8% Fibonacci Extension drawn from 1.32458 to 1.34019.

1.29932: The third downside target is noted at 1.29932, corresponding to the 261.8% Fibonacci Extension drawn from 1.32458 to 1.34019.

1.27073: An additional downside target is determined at 1.27073, reflecting the trough marked April 7.

Fundamentals

At its May meeting, the Bank of England’s Monetary Policy Committee (MPC) voted narrowly (5–4) to cut the Bank Rate by 25 basis points to 4.25%. The decision reflected continued progress in disinflation, with CPI inflation having fallen to 2.6% in March. However, inflation risks remained, particularly due to elevated pay growth and a forecasted temporary rise in inflation to 3.5% in Q3, driven by earlier increases in energy prices.

On the other hand, the Federal Open Market Committee (FOMC) kept the federal funds rate unchanged at 4.25%–4.5%, citing rising risks to both inflation and employment. The Committee reiterated its commitment to achieving maximum employment and 2% inflation over the long run and will continue reducing its balance sheet. Future policy decisions will depend on incoming data, the evolving outlook, and the balance of risks.

Meanwhile, the United States announced a new trade framework with the United Kingdom, which was described by President Trump as the first in a series of agreements. The deal allows for the fast-tracking of US goods through UK customs and reduces certain export barriers. Trump also stated that tariffs on China could be lowered if upcoming trade talks go well.

Conclusion

With GBPUSD hovering near a pivotal support level and technical signals offering mixed cues, traders should remain vigilant as market sentiment could shift quickly, especially in response to Friday’s Canadian employment data. While central bank policy divergence and global trade developments add further layers of complexity, the pair’s next directional move will likely depend on whether key support at 1.32458 holds or gives way. A break either way could set the tone for the sessions ahead.