GBP/USD Reverses From 1.2900 Resistance — 150‑pip Pullback to 1.2700 Support
GBP/USD failed to sustain a bullish breakout after hitting a key resistance cluster around 1.2900, retreating roughly 150 pips over three sessions to test support near the 50‑day SMA at 1.2700. Technical factors included rejection at the 61.8% Fibonacci retracement of the 2024 high, a long-term descending trendline, and an overbought daily RSI. Order-flow and options data showed heavy sell orders above 1.2880 and rising put demand as the pair neared resistance. Fundamentally, stickier UK core CPI and renewed political uncertainty dampened sterling’s outlook even as sticky inflation complicates Bank of England cuts; meanwhile stronger US retail sales and hawkish Fed commentary supported the dollar. Futures markets priced a narrowing probability gap for near-term rate cuts (BoE ~40% vs Fed ~35% by early May), reducing a sterling tailwind. Traders should watch immediate support at 1.2700 (50‑day SMA) and a deeper floor near 1.2600; key catalysts will be UK and US economic data and central bank communications. Short-term implications include liquidation of crowded long positions and elevated implied volatility, while a sustained rally requires fresh bullish catalysts and clearer policy divergence.
Neutral
The article describes a technical rejection at 1.2900 that triggered a ~150‑pip pullback to 1.2700. Technical signals (61.8% Fibonacci, descending trendline, overbought RSI), heavy sell order flow and rising put demand point to forced liquidation of crowded longs, which is typically short‑term bearish for GBP/USD. At the same time, fundamentals are mixed: sticky UK inflation complicates BoE easing (supportive for sterling), while stronger US retail sales and hawkish Fed comments bolster the dollar. Market‑implied rate‑cut probabilities have narrowed, removing a clear directional driver. Implied volatility rise and higher volumes suggest traders expect further swings rather than a decisive trend. Therefore the immediate impact is neutral-to-cautiously-bearish for risk positions: likely short-term downside or consolidation as markets digest data and positioning, but a longer-term bullish resumption remains possible if sterling-friendly data or wider BoE/Fed divergence reappears. This maps to past episodes where failed breakouts led to multi-week consolidation before a renewed trend when fresh catalysts arrived.