In the early European session on Monday, the GBP/USD pair has embarked on a positive trajectory, benefiting from a prevailing risk-on environment. The major pair’s rebound is noteworthy, although concerns linger over potential headwinds from escalating tensions in the Red Sea, which could fuel demand for safe-haven assets and constrain the upward momentum of GBP/USD. As of the latest update, the pair is trading at 1.2722, reflecting a 0.16% gain for the day.
From a technical standpoint, GBP/USD continues its upward trend, maintaining its position above the 100-hour Exponential Moving Averages (EMA) on the four-hour chart. Additionally, the 14-day Relative Strength Index (RSI) resides comfortably in bullish territory above the 50 midline, suggesting favorable conditions for further upside movements.
A decisive breach beyond the upper boundary of the Bollinger Band at 1.2725 could expose the January 8 high at 1.2767. Subsequent upside barriers include the December 14 high at 1.2795 and, ultimately, the December 28 high at 1.2828.
Conversely, initial support for GBP/USD is situated near the lower limit of the Bollinger Band at 1.2655. The pivotal support zone is identified around 1.2600–1.2610, marked by the convergence of the psychological level and the January 2 low. A sustained downturn below this level may trigger further selling, with the potential to reach the December 11 low at 1.2535. Traders are advised to monitor these key levels closely for potential shifts in market dynamics.