29 September 2025,03:29
Daily Market Analysis
29 September 2025, 03:29
Key Takeaways:
*GBP/USD has rallied since last Friday, supported by dollar softness and improved risk sentiment.
*Political tensions and fiscal credibility concerns still cast a shadow over sterling’s medium-term outlook.
*Tomorrow’s UK GDP release will be pivotal: a repeat of prior growth could stall momentum, while a stronger print could extend gains.
Market Summary:
Sterling has enjoyed a bullish run since late last week, with GBP/USD climbing steadily as markets embraced a softer U.S. dollar backdrop and pockets of optimism around the UK economy. Risk appetite has also played a role, with investors showing a willingness to re-engage with higher-beta currencies despite lingering concerns over the UK’s fiscal outlook and political noise. The pound’s resilience reflects both external dollar weakness and short-covering after an extended period of underperformance.
That said, the fundamental backdrop remains fragile. Fiscal credibility remains under scrutiny after recent gilt auctions highlighted investor unease over the government’s borrowing trajectory, while political tensions within Labour have added uncertainty to the policy landscape. For now, markets have looked past these risks, but they continue to hang over sterling and could resurface quickly should sentiment sour.
The upcoming GDP release will be the key test of whether the current bullish momentum can be sustained. If growth prints broadly in line with the previous reading is steady but uninspiring that the market reaction may be muted, with GBP/USD at risk of stalling after its recent advance. Traders could interpret such an outcome as evidence that the economy is still stuck in a low-growth cycle, keeping medium-term upside capped.
On the other hand, a stronger-than-expected GDP figure would reinforce the recent rally by signaling greater resilience in UK activity, potentially extending sterling’s gains against the dollar. But with political and fiscal risks still unresolved, any bullish follow-through may prove vulnerable to reversal if external conditions shift or U.S. data reasserts dollar strength. Overall, the near-term momentum is supportive for GBP, but the sustainability of this trend rests heavily on tomorrow’s data.
GBPUSD, H4:
GBPUSD has staged a recovery from the 1.3350 low, reclaiming the 1.3435 support level, but upside momentum remains fragile. The rebound is yet to retest the 1.3540 resistance, with the next extension target near 1.3665 if bulls regain traction. On the downside, immediate support rests at 1.3350, followed by 1.3230 and deeper at 1.3165.
RSI has bounced from oversold territory, now near 49, suggesting a relief rally but without strong bullish conviction. MACD has flipped slightly positive, though the histogram shows shallow momentum, hinting at limited follow-through for now.
Overall, GBPUSD remains in a corrective rebound within a broader bearish structure. A sustained close above 1.3540 would strengthen bullish recovery prospects, while failure to defend 1.3435 risks dragging the pair back toward 1.3350 and below.
Resistance Levels: 1.3435, 1.3540
Support Levels: 1.3350, 1.3230
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