Trade of The Day – GBP/USD

Facts

• GBPUSD has been trading below the EMA10 on the D1 timeframe for the ninth consecutive session.
• RSI has returned to the 40 level.
• The Guardian reports that a change of the UK Prime Minister could occur as early as July 2026.

Recommendation

• Trade: Short (SELL) on GBPUSD at market price
• Target Price (Take Profit; TP): 1.30900 (TP1), 1.30000 (TP2)
• Stop Loss (SL): 1.33090

Source: xStation5

Opinion

The GBP/USD rate is rebounding slightly as the dollar (specifically the dollar index, USDIDX) corrects across the broader market after breaking out to a 13-month high. Technically, however, we are far from breaking the downward trend on GBPUSD. Even after the recent bounce, the price has been moving below the 10-day exponential moving average (EMA10; yellow) for 9 days. Furthermore, the cascade of the remaining EMAs (longer over shorter: EMA100 over EMA30, and EMA30 over EMA10) signals a clear downtrend, the reversal of which would require a series of bullish turnarounds. The chances of a strictly pro-pound turnaround remain slim. The British currency is primarily weighed down by a period of political uncertainty and the ongoing leadership transition within the ruling Labour Party following Prime Minister Starmer’s resignation.

The Guardian reported that according to preliminary internal party plans, Burnham could assume the office of Prime Minister as early as July 17. However, the anticipation—especially regarding the appointments of key cabinet members such as the Chancellor—should continue to test the pound. On the dollar side, we see a persistently hawkish Fed narrative, an increase in core PCE inflation to 3.4%, and a Q1 2026 GDP revision from 1.6% to 2.1%. The backdrop of a gathering momentum in the US economy alongside elevated inflation contrasts sharply with stagflationary tendencies in the UK. This divergence should extend the current trend on GBPUSD and the UK/US 10-year bond yield spread, until potential wage effects emerge from the recent UK energy shock, which could force the Bank of England into a more hawkish monetary policy stance. However, UK policy is already restrictive, which limits the potential for a sharp pivot.

Methodology

This recommendation was prepared based on a technical analysis of the GBPUSD chart and a fundamental analysis of the economies in question (monetary policy in the United Kingdom and the United States). The directional bias of the recommendation was determined using moving averages and market expectations regarding central bank policies. Take Profit and Stop Loss levels were established using Fibonacci retracements and price action:

• TP1 and TP2 are located at the nearest support levels from November 2025.
• SL is placed halfway between the EMA10 and EMA30, as well as between the 23.6% and 38.2% Fibo levels.