The GBPUSD pair is making a feeble attempt to rebound within its established downtrend, managing only a sluggish bounce off local lows. In reality, the price lacks the energy or conviction for a full-fledged reversal. A small bullish candlestick formed this morning points to temporary consolidation, not a change in trend—a reading reinforced by indicators that continue to tilt decisively toward bears.
Technically, quotes are stuck below the Bollinger Band midline (1.34550), yet they still hold above its lower boundary (1.33581). This reflects a gloomy market outlook with muted volatility. The Stochastic Oscillator (%K=32, %D=36) is drifting toward oversold territory, with the 20 threshold in sight, suggesting that selling momentum might be running on fumes, though no formal bullish signal has been triggered. Concurrently, the Chaikin Oscillator is in the red, showing there hasn't been much buying recently. Fortunately, the uptrend says a corrective bounce could be brewing, particularly if support at 1.3360 holds firm.
Fundamentally, the pair is hemmed in by a resurgent greenback. Robust US labor data, including a surprise drop in jobless claims, has cemented the view that the Federal Reserve (Fed) is in no hurry to cut interest rates. This stands in stark contrast to the more dovish shadow hanging over the Bank of England (BoE).
The takeaway is that sterling has only limited and fragile rebound potential. Although oscillators are flashing short-term oversold signals, the fundamental imbalance favoring the dollar and persistent worries over the UK's economic outlook place a lid on the pair's meaningful recovery.
Consider the trading plan outlined below:
Sell GBPUSD on the current rebound. Place Take profit 1 at 1.33210 and Take profit 2 at 1.32700. Set Stop loss at 1.34800.
This forecast holds true from January 16 till January 23, 2026.
This content is for informational purposes only and is not intended to be investing advice.
