GBP/USD traded near 1.3230 during Asian hours on Friday after falling by more than 0.5% the previous day. The daily chart keeps a bearish tone, with the pair still moving inside a descending channel.
The near-term view remains mildly bearish as price stays below the nine-day EMA at 1.3273 and the 50-day EMA at 1.3394. The pair has formed lower highs and lower closes from the 1.35 area.
Momentum Signals Still Point Lower
The 14-day RSI sits in the low-40s, pointing to negative momentum without being oversold. This suggests more downside is possible while reducing the chance of an immediate rebound from exhaustion.
Support is seen near the channel’s lower boundary around 1.3150. If the pair breaks below the channel, it could move towards 1.3010, the lowest level since April 2025, recorded in November 2025.
Resistance starts at 1.3273, then 1.3394, and then the channel top near 1.3440. A firm break above this area would shift the bias to bullish and bring 1.3869 into view, the highest since September 2021, reached on 27 January.
We saw the descending channel from 2025 ultimately break to the downside, pushing the pair well below the 1.3150 support level mentioned at the time. As of today, April 3, 2026, the pound is struggling to hold its ground, trading nearer to 1.2850. This confirms the weakness that was identified last year has indeed continued.
Key Fundamental Drivers Now In Focus
The fundamental picture for the UK continues to weigh on the pound, with recent data showing March’s retail sales unexpectedly falling by 0.5%. The Bank of England appears hesitant to offer support, as the latest Consumer Price Index reading is still stubbornly above target at 3.1%. This creates a difficult environment where the central bank cannot easily cut rates to stimulate growth.
Conversely, the US dollar benefits from a more resilient economic outlook, with the latest non-farm payrolls report for March adding a robust 215,000 jobs. Federal Reserve officials continue to signal they will hold interest rates steady, reinforcing the dollar’s strength. This policy divergence between a hawkish Fed and a cautious BoE is a primary driver for the pair’s downward pressure.
In the coming weeks, we believe traders should consider strategies that profit from further downside or limited upside in GBP/USD. Buying put options with strike prices below 1.2800 could offer a defined-risk way to position for a break lower. The November 2025 low around 1.3010, which was once seen as a key support, now acts as a significant resistance level for any potential rallies.
This bearish sentiment is reflected in the broader market, as the latest Commitment of Traders report shows non-commercial speculators have increased their net short positions on the pound. The data indicates that large funds are betting on continued weakness. We view any bounces toward the 1.2900 area as potential opportunities to initiate or add to short positions.
