Trump’s Policies Weigh on the Dollar, Pound Holds within Wide Range
The GBP/USD pair continued to trade lower on Wednesday, a move that appears illogical at first glance. However, it is important to remember that markets are not always trending. In fact, sideways, or “flat,” trading dominates around 80% of the time.
Market Context
Since early May, the pound has been moving within a wide range between 1.3150 and 1.3780 on the daily chart. This consolidation phase reflects long-term accumulation and distribution by major market participants rather than headline-driven moves. Within such a sideways market, sudden swings often lack fundamental justification making the recent decline less surprising from a technical perspective.
From a broader standpoint, the outlook for the U.S. dollar remains weak. Much of this is linked to political factors, with Donald Trump’s policies seen as undermining confidence in the greenback. While his administration may support equities and gold, the FX market continues to interpret his actions as dollar-negative.
On the geopolitical front, Trump’s self-declared role as a global peacemaker has delivered few tangible results. Conflicts in Ukraine and the Middle East remain unresolved, despite repeated promises of quick resolutions. Combined with policy uncertainty and attempts to reshape the Federal Reserve’s composition, these dynamics continue to weigh on the dollar’s long-term prospects.
Technical Outlook
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Volatility: The average daily range for GBP/USD over the past five sessions is 88 pips, a normal reading for this pair. For Thursday, expected movement is within 1.3359 – 1.3535.
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Trend: The higher linear regression channel still points upward, signalling a medium-term bullish bias despite short-term corrections.
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Momentum: The CCI indicator has once again dipped into oversold territory, hinting at the potential for the uptrend to resume.
Key Levels
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Support: 1.3428 (S1), 1.3367 (S2), 1.3306 (S3)
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Resistance: 1.3489 (R1), 1.3550 (R2), 1.3611 (R3)
Trading Strategy
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Bullish Scenario: As long as GBP/USD holds above the moving average, long positions remain preferable, with upside targets at 1.3672 and 1.3733.
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Bearish Scenario: If price falls below the moving average, traders may consider shorts on a technical basis. However, these setups should be viewed as temporary corrections within a broader bullish structure.
Chart Tools Used
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Linear Regression Channels: Identify prevailing trend direction and strength.
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Moving Average (20,0 smoothed): Defines the short-term trend bias.
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Murray Levels: Mark support and resistance targets.
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Volatility Bands (red lines): Project the day’s likely trading range.
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CCI Indicator: Oversold readings (< -250) often signal upcoming reversals.
Despite recent corrections, GBP/USD retains a bullish medium-term bias. Trump’s policies continue to undermine the dollar, keeping the pound’s upward potential intact while the pair consolidates within its long-term range.
