GBPUSD correction extends ahead of new Fed Chair announcement

The GBPUSD pair kicked off this week with explosive momentum, shattering last year's high and breaking above the 1.38 threshold for the first time since autumn 2021. This rally, however, quickly ran into a wall of profit-taking. Although bulls clawed back most of Wednesday's and Thursday's losses by the end of the session, selling pressure is clearly building. If the bearish tilt holds, the so-called "Cable" will tumble toward 1.363—an area defined by the gap left between January 23 and 26.

The technical landscape now signals a deepening correction. Both the Relative Strength Index (RSI) and Stochastic Oscillator have been pushed into overbought territory and are primed for a new downward reversal. The first line of defense for the pound lies at 1.3725, aligning with last September's peak. A breach here could open the floodgates for a more substantial drop to 1.363, with a deeper slide toward 1.355 being possible over time—though such a descent is likely to unfold at a far more measured pace than the recent blistering rally.

Fundamentally, the wind is shifting in the greenback's favor, fueled by a surprise announcement from Donald Trump. The US President revealed he will name the successor to Federal Reserve (Fed) Chairman Jerome Powell later today. According to Bloomberg, Kevin Warsh, a former Fed Governor from 2006 to 2011, is the headliner now. He was also a frontrunner in the 2017 selection that ultimately yielded Powell.

Market analysts from Bloomberg and Reuters view Warsh as a "Goldilocks" candidate. The official is open to further interest rate cuts, thus matching Trump's preference. Yet, his prior tenure at the central bank suggests a pragmatic, institutional approach less prone to radical shifts than other contenders like Rick Rieder or Kevin Hassett. In short, a Warsh nomination would strike a middle ground, accommodating the White House's pressure for dovish leanings while preserving US financial credibility. 

The following strategy for your trading may come into play:

Sell GBPUSD at the current price. Lock in profits at 1.363. Place Stop loss at 1.385.