GBP/USD Vulnerable as Trendline Break Sets Up Potential 600 Pip Drop

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GBPUSD has continued its recent struggles today with the pair on a 8-day losing streak. This comes after cable posted 5 consecutive months of gains, to rise from a 2025 low of 1.2099 to a high of 1.3788, last seen in October 2021.

The rally in GBPUSD was largely facilitated by USD weakness following Donald Trump's inauguration and announcement of global tariffs. The move which saw the US Dollar lose its safe haven status and the US Dollar Index (DXY) drop below the psychological 100.00 mark for the first time since a brief foray in July 2023.

However as tariffs have drawn near the US Dollar has shown signs of life. The DXY is now on four-day win streak and is approaching the 99.00 handle. This comes at a time when the UK is facing macro challenges which have begun to weigh on the GBP.

US Dollar Index (DXY) Daily Chart, July 15 2025

Source: TradingView

UK CPI Ahead as Macro Factors Weigh on the Pound

The recent drop in the pound isn’t due to fiscal issues, as the 10-year Gilt-Bund spread has tightened to 187 bps, its lowest since April. Instead, it’s driven by narrowing short-term interest rate spreads. This reflects doubts about whether the Bank of England will ease policy faster than expected.

Tonight, Governor Andrew Bailey will speak, likely signaling that quicker rate cuts are possible if the labor market weakens following an uptick in UK unemployment.

Key data releases lie ahead with June CPI tomorrow and UK labor market figures on Thursday. If May’s payroll drop of -109k isn’t revised and June shows further declines, UK rates and the pound could fall further. All of this may play into the current setup developing for GBPUSD.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar.

Technical Analysis - GBP/USD

GBP/USD is on course for a daily candle close below the long term ascending trendline which traces back to January 13 lows of 1.2099.

GBPUSD is on a 8 day losing streak which may warrant caution that a short-term pullback may materialize.

Further supporting this narrative is the RSI period 14 which is approaching the 30 handle, which is considered an oversold zone. However, as we know this is no guarantee that a bullish move will occur, as the RSI has a tendency to continue lower even when it is below the 30 handle if the bearish trend is strong.

There is support around a 100 pips below current price, around the 1.3266 handle which is where the 100-day SMA rests. Just below that, we have the 1.3250 handle which is also a multi-year key level which has served as support/resistance over the past few years.

A break of this support level brings the key pivot level of 1.3000 into focus. A break here could lead to a drop toward the first potential trendline break target which rests at 1.2708, some 600 pips from current prices.

Indeed should such a move play out this is one that may present further opportunities for entry along the way, but it is definitely worth watching.

GBP/USD Daily Chart, July 15, 2025

Source: TradingView.com

Support

• 1.3266
• 1.3000
• 1.2708

Resistance

• 1.3500
• 1.3788
• 1.4000

Client Sentiment Data - GBP/USD

Looking at OANDA client sentiment data and market participants are rather neutral on GBP/USD with 52% of traders net-short. I prefer to take a contrarian view toward crowd sentiment, however the fact that traders are relatively neutral does not help provide any significant insights. All it shows is that market participants are cautious and rightly so as the fundamentals and technicals hint at further downside but after 8 consecutive bearish days market participants are clearly cautious.

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