Created on August 20, 2026

We have reached a milestone in the GBP/USD currency pair – possibly a decisive one – following the strong, long-term bullish breakout yesterday. While the price action remains well within its longer-term range, the bullish case may finally be becoming increasingly convincing for several solid reasons, both fundamental and technical.

Of course, it is worth noting that the price hasn’t gone anywhere that it wasn’t just a few months ago, and that there are arguments that a very long-term range is holding. Yet these arguments are certainly becoming weaker by the day.

GBP/USD Breakout Gains Fundamental Support

A breakout in a Forex currency pair such as the GBP/USD doesn’t necessarily mean much at all, but when there is a lot going on to support it, it is worth paying closer attention. We arguably are in such a situation now.

Yesterday saw a new factor which supported this bullish case. Firstly, yesterday saw the US Treasury step in to support the long end of its bond market, and this hammered the US Dollar. The US Dollar Index is now trading near its three-month low after falling sharply yesterday, continuing the dominant bearish trend in the greenback.

A pre-existing factor adding to the breakout’s relevance is yesterday’s relatively high but not unexpected UK CPI (inflation) print this morning just before the London session got underway.

GBP/USD Technical Analysis: 1.3600 Holds as 1.3658 Nears

Yesterday saw the price make a strong bullish breakout to reach a new three month high above 1.3630. The price has retreated a little but was still trading above the round number at 1.3600 late in the Asian session. These are bullish price actions. The six month high at 1.3658 is within sight and could easily be reached or even exceeded today.

The breakout was accompanied by two key bullish technical developments: the simultaneous breakout from the ascending bullish price channel, indicated within the price chart below by the linear regression analysis study which had held for almost three weeks; and the flipping of the key long-term resistance level at 1.3553 to become new obvious support, evidenced by the price basing at that level early in yesterday’s London session.

What a Break Above 1.3658 Could Mean

The price has been consolidating, mostly above the round number at 1.3600, since yesterday’s New York session. This kind of price action after a strong advance often signifies a further move higher is imminent. The nearest overhead resistance level is 1.3653 and just a few pips above that lies the six-month high price. A break beyond that would effectively see the price trading in blue sky which could mean an unusually rapid rise.

GBP/USD H1 Price Chart

GBP/USD Downside Risks: Fed Hawks and a 1.3552 Retest

While there are compelling reasons to see a bullish outlook, there are fundamental, sentimental, and even technical factors that could work against that which are worth considering.

Last night’s release of the minutes of the most recent FOMC (Federal Reserve) meeting showed that the three dissenting votes in favour of a rate hike were a bloc vote, meaning that there is now clearly a hawkish bloc pushing for a more hawkish interest rate. More importantly, the minutes indicated that there is some agreement with other members who may be prepared to join them soon. If more members begin making public comments more supportive of a rate hike, this will tip the odds in favour of a sooner rate hike, which would likely strengthen the US Dollar, and put bearish pressure on the rate of the GBP/USD.

Let’s not forget the British Pound, which is supported by a relatively high interest rate and inflation rate. If any cracks arise in that picture, we could also see bearish pressure.

Finally, there is a general tendency in the Forex market for prices to revert to a mean which might work against a further quick advance.

Instead of the price continuing to rise and test or even break out beyond the six-month high, we might see a pullback to the new support level at 1.3552. It is also possible that the current area of price action supported just below the round number at 1.3600 might hold, although if that happens, it will suggest higher prices. Finally, we might see the price break down below 1.3552 or even the round number at 1.3500. The former scenario would be somewhat bearish, but a sustained break below 1.3500 could really turn the picture around from a long-term bullish breakout with traders jumping on the bandwagon, to a quick flop back into the long-term range.

Key GBP/USD Levels to Watch Today

There are some pivotal levels I outlined above which are likely to be psychological “lines in the sand” worth watching, which will indicate sentiment. These could be potential buying points, or even selling points, depending upon the price action. It is worth remembering that a traditionally volatile Forex pair like this one tends to be driven by short-term momentum, which can turn very easily, and the early part of the London session has historically tended to also provide some clues about the day’s direction. How the price behaves today might reveal whether we are really in new territory or not.

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The EURJPY pair provided some corrective trading yesterday by reaching 183.90 level, holding positively above the main support at 183.15, renewing the main bullish attempts by surpassing the barrier at 184.90.

Providing a positive close above the current barrier is important for reinforcing the chances of recording new gains by its rally towards 185.45 initially, reaching the next target at 185.95.

The expected trading range for today is between 184.60 and 85.45

Trend forecast: Bullish

Created on August 19, 2026

The Euro and the pound continue to lock horns in a relatively fairly matched battle near the 0.8550 level.

EUR/GBP

The Euro and the pound continue to lock horns in a relatively fairly matched battle near the 0.8550 level. I’m watching this market because we had recently dropped pretty significantly, bounced to test the 50% Fibonacci retracement level and the 50-day EMA as a result.

And ultimately, I think this means that you have a scenario where technical traders may have entered the fray. The question is now: do we get any type of follow-through? This market is still asking questions about interest rates, but also the energy supply that may or may not be coming to the UK and the EU. As I record, missiles are flying in the Gulf again.

If we do, then you have the possibility of the market really taking off to the downside, perhaps to the 0.85 level, maybe even revisiting the 0.8450 level where we had bounced from.

Technical Resistance and Yield Differentials

Rallies at this point in time will have to contend with the 50-day EMA, which of course will cause some technical resistance. But breaking above there would be a very bullish sign and could open up the door to 0.86. This would be a reversal of the overall sentiment at the moment and therefore be difficult to achieve.

This is a market that’s been bearish for a while. Interest rates do favor the British pound, so that in and of itself might be a reason to think about it. This is a form of the carry trade, but in slow motion. The stability here, though, could be a bonus for those worried about intervention in the yen-denominated markets.

I like the idea of taking advantage of the yield differential in a situation where, quite frankly, I just don’t see a good argument for the market taking off to the upside. But you always have to be open to the other possibilities.

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Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire