The GBP/USD pair has reversed a modest dip from the Asian session and moved back above the 1.3100 level on Monday, supported by mild US Dollar (USD) weakness. However, uncertainty surrounding the upcoming UK budget and increasing expectations of a Bank of England (BoE) rate cut next month continue to limit upside potential for the pair.
From a technical standpoint, last week’s breakdown below the critical 200-day Simple Moving Average (SMA) was a key bearish signal. Daily chart oscillators remain deeply negative, suggesting fresh selling interest may emerge near the 1.3120–1.3125 region. Above this zone, resistance awaits at 1.3155–1.3160, last week’s swing high. A break above this barrier could trigger short-covering.
A bullish extension could allow GBP/USD to retest the 1.3200 round figure and push toward the 1.3250 intermediate resistance. Further momentum may bring the pair back toward the 200-day SMA near 1.3300. A sustained move above this level would shift the near-term outlook in favor of GBP buyers and open the door to a more meaningful recovery.
On the downside, initial support is seen at 1.3040–1.3035, the two-week low reached last Thursday. Below that, the 1.3000 psychological mark becomes the next key level. A decisive break under 1.3000 would expose 1.2950, with a deeper slide potentially driving the pair toward sub-1.2900 territory.
