GBP/USD Technical: Corrective decline ended, potential bullish reversal in progress for sterling as NFP looms

[Redator]

This is a follow-up analysis and a timely update of our prior report, “GBP/USD Technical: Sterling torpedoed by spike in 30-year gilt yield, watch the 1.3315/3280 key support”, published on 2 September 2025.

The price actions of the GBP/USD have shaped the expected minor corrective decline in the past two sessions to print an intraday low of 1.3333 on Wednesday, 3 September, just whiskers above the pre-defined 1.3315/1.3280 key medium-term pivotal support highlighted in our last publication.

Let’s now determine its next short-term (1 to 3 days) directional bias and key levels to watch as we await the key US labour data release: non-farm payrolls and unemployment rate for August at 1230 GMT today.

Fig. 1: GBP/USD minor trend as of 5 Sep 2025 (Source: TradingView)

Preferred trend bias (1-3 days)

The minor corrective decline of -1.9% (high to low) of the GBP/USD that spanned from 14 August 2025 high to 3 September 2025 low may have ended.

Bullish bias above 1.3395 key short-term pivotal for the next intermediate resistances to come in at 1.3545, 1.3590/1.3610, and 1.3650/1.3680.

Key elements

• The GBP/USD has shaped a minor bullish reversal right above the lower boundary of the medium-term ascending trendline in place since 13 January 2025 low on 3 September 2025.
• The hourly RSI momentum indicator of the GBP/USD has just staged a bullish breakout above a parallel descending resistance and flashed an earlier bullish divergence condition at its oversold region on 3 September 2025.
• The 1.3395 key short-term pivotal support is defined by a former minor swing high formed on 2 September 2025 during the US session and the 61.8% Fibonacci retracement of the ongoing minor rally from the 3 September 2025 low to the current intraday high of 5 September at the time of writing.
• The 2-year yield spread premium between the UK gilt and US Treasury note has continued to expand (inched higher) since the 3 September 2025 level of 0.29% to a current level of 0.37%. These observations suggest that short-term UK gilt is relatively more attractive than US Treasury notes in terms of yield differential, in turn, putting upside pressure on GBP/USD.

Alternative trend bias (1 to 3 days)

A break below 1.3395 in GBP/USD would invalidate the bullish outlook, opening the door to a minor corrective decline toward the key medium-term support zone at 1.3315/1.3280.

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