GBPUSD Rises to Multi-Year Highs, Upside to Prevail Above 1.3220

Summary:
• The GBPUSD pair has everything going for it, with UK PM Keir Starmer's comments on higher taxes adding propulsion. But there's some risk.

GBPUSD rebounded on Tuesday, rising to the highest level since March 2022. The pair recovered from Monday’s dip that snapped a seven-session winning streak to go up by 0.2 percent, and traded at 1.3219 as of this writing. The odds are stuck against the dollar following Fed Chairman Jerome Powell’s comments last Friday that time had come for the Fed to adjust the monetary policy.

The dollar’s fightback on Monday was helped by the higher-than-expected growth rate of the US Durable Goods Orders, which came in at 9 percent versus the forecast rate of 4 percent. However, the absence of high-impact US macroeconomic data on Tuesday means that the greenback lacks the ammunition to retain its small gains.

Initial US Jobless Claims figures will be out on Wednesday, but the market will likely ignore the readings and pay greater attention to the Personal Consumption Expenditure (PCE) data to be released on Friday.

However, meanwhile, UK Prime Minister Keir Starmer stated on Tuesday that the UK should prepare for higher taxes, aimed at achieving “short-term pain and long-term good.” With the Bank of England expected to retain the current interest rates beyond September, Starmer’s comments will add fresh propulsion to the GBPUSD pair.

Momentum indicators

GBPUSD looks set to continue with the upside but possibly with a drag, as seen on the 2-hour chart. The price is above the Volume Weighted Moving Average (VWMA), which corresponds to the 1.3202 level. On the other hand, the MACD line is still below the indicator line, signaling an underlying fightback by the sellers.

GBPUSD support and resistance

The 30-minute GBPUSD chart points to the likely continuation of the upside if the price stays above 1.3220. Based on that momentum, the bulls will likely encounter initial resistance at 1.3235, but extended control could enable them to clear that hurdle and head higher to test 1.3247.

Alternatively, moving below 1.3220 will signal the onset of bearish control. In that case, we could see the first support coming at 1.3209. However, extended downside momentum could break below that mark, invalidating the upside narrative and potentially clearing the path to test 1.3195.