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  • GBP/USD jumped to fresh multi-year tops on Tuesday amid a broad-based USD weakness.
  • A sustained breakthrough the 1.3755-60 congestion zone was seen as a key trigger for bulls.
  • The formation of an ascending trend-channel also points to a well-established bullish trend.

The GBP/USD pair shot to fresh multi-year tops on Tuesday, albeit struggled to capitalize on the move and remained below the 1.3800 mark through the mid-European session. Retreating US Treasury bond yields undermined the USD, which was seen as a key factor lending support to the major.

From a technical perspective, the recent positive move from January monthly swing lows, around mid-1.3400s, has been along an upward sloping channel. The formation points to a well-established short-term bullish trend and supports prospects for an extension of the recent appreciating move.

The constructive outlook is reinforced by the fact that the GBP/USD pair confirmed a near-term bullish breakout through the 1.3755-60 congestion zone on Monday. Moreover, technical indicators on the daily chart maintained their bullish bias and are still far from being in the overbought territory.

Hence, a subsequent strength towards testing the ascending channel resistance, around the 1.3825 region, remains a distinct possibility. Some follow-through buying will mark a fresh bullish breakout and set the stage a move to reclaim the 1.3900 mark for the first time since April 2018.

On the flip side, the 1.3760-55 resistance breakpoint now seems to protect the immediate downside. Any meaningful slide below the mentioned resistance-turned-support might be seen as a buying opportunity near the 1.3600 mark. This, in turn, should help limit the downside, at least for the time being.

GBP/USD 4-hourly chart

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Technical levels to watch