GBP/USD Forex Signal 28/01: Sterling Rally Continues (Chart)

(MENAFN- Daily Forex) Bullish view

• Buy the GBP/USD pair and set a take-profit at 1.3915.
• Add a stop-loss at 1.3725.
• Timeline: 1-2 days.

Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.3725.
• Add a stop-loss at 1.3915.

The GBP/USD exchange rate continued its strong rally, reaching its highest level since 2021. It jumped to a high of 1.3780, continuing a trend that started in November when it bottomed at 1.3030.

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The GBP/USD exchange rate continued rising because of the ongoing US Dollar Index (DXY) crash. The index, which tracks the performance of the greenback against a basket of currencies, was trading at $96, down sharply from last year's high of $110.

This performance happened as investors placed their bets that the US government shutdown would happen. A Polymarket poll showed that these odds have soared to over 80%, with Democrats insisting on major reforms.

The dollar has also plunged because of Donald Trump's policies that have dragged users central banks away from the greenback. For example, Trump has warned of potential tariffs on goods coming from South Korea and Canada.

The GBP/USD pair also jumped as investors reacted to the latest US consumer confidence report. Data released by the Conference Board showed that the US consumer confidence plunged to the lowest level in over a decade.

American consumers are concerned about inflation, which has remained at an elevated level during the Trump administration. Also, consumers are worried about the labor market and the erratic views of the president.

The next key catalyst for the pair is the upcoming Federal Reserve interest rate decision. Economists polled by Reuters expect that the bank will leave interest rates unchanged after delivering three cuts last year.

EURUSD Chart by TradingViewGBP/USD Technical Analysis

The daily chart shows that the GBP/USD pair has been in a strong uptrend in the past few months. It has jumped from a low of 1.3020 in December to a high of 1.3780.

The pair has moved above the important resistance level at 1.3727, its highest level in September last year. It has moved above the ultimate resistance level of the Murrey Math Lines tool.

The pair has remained above the 50-day Exponential Moving Average (EMA). Also, the Relative Strength Index (RSI) has moved above the overbought level.

Therefore, the pair will likely continue rising as the extreme overshoot level at 1.3915. A move below the support at 1.3727 will invalidate the bullish outlook.

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