GBP/USD has traded lower for a third day, near 1.3500 in Asian hours on Thursday. The daily chart shows the pair has moved below an ascending channel, which may point to a bearish reversal.
The pair is still slightly above the nine-period EMA at 1.3493 and above the 50-period EMA. The 14-day RSI is near 56, suggesting positive momentum without being overbought.
If GBP/USD moves back into the ascending channel, it may retest the two-month high of 1.3599 set on 17 April. Further upside could target the channel top near 1.3810, then 1.3869, the highest level since September 2021, reached on 27 January.
On the downside, support is at the nine-day EMA of 1.3493, then the 50-day EMA at 1.3427. A sustained drop below these levels could open 1.3159, a nearly five-month low from 31 March, and then 1.3010, the lowest since April 2025, recorded in November 2025.
The technical analysis was produced with help from an AI tool.
Looking back at this analysis from around this time last year, we can see GBP/USD was trading near 1.3500 with a cautiously bullish outlook. The potential was for a push toward the 1.3599 high, but the warning signs of a bearish reversal were also present. We were watching the nine-day EMA at 1.3493 as a key support level.
That potential break below the ascending channel did occur in the weeks that followed during May 2025. The pair failed to hold its constructive bias and eventually fell below the key 50-day EMA. This confirmed the bearish reversal, leading to a slide that tested the 1.3159 low and even reached the 1.3010 level later in November 2025.
As of today, April 23, 2026, the pair is trading at a lower range, around 1.2850. The market dynamic is now being driven by surprisingly persistent UK inflation, which official data showed last week hit 3.5% for March, above expectations. This has forced the Bank of England to signal that rate cuts are further away than the market had priced in.
Conversely, the US economy is showing some signs of cooling, with the most recent Non-Farm Payrolls data for March adding only 180,000 jobs. This has led to speculation that the Federal Reserve may be the first to cut interest rates later this year. This policy divergence between a hawkish BoE and a potentially dovish Fed creates a fundamentally bullish case for GBP/USD.
Given this setup, we should consider strategies that profit from a potential rise in the pound. Buying call options with a strike price near 1.3000 and an expiry in June 2026 would offer leveraged exposure to this expected upward move. This allows us to define our maximum risk to the premium paid for the option.
For a more risk-managed position, a bull call spread could be effective. We could buy the 1.3000 strike call and simultaneously sell the 1.3250 strike call, both with the same expiration. This lowers the net cost of the position but caps the maximum profit if the pair rallies significantly beyond 1.3250.
Implied volatility in the pair has picked up due to this central bank uncertainty. This makes selling options a viable strategy for generating income if we believe support will hold. Selling out-of-the-money put options with a strike price below the recent floor, perhaps around 1.2750, would allow us to collect premium.
