GBP/USD stays firm above 1.3700, near fresh multi-year highs

GBP/USD holds its winning streak for the fourth successive session, trading above 1.3700 in the European session on Thursday. The pair hangs close to three-year highs amid sustained US Dollar weakness, in light of US President Trump's fresh attack on the Fed's credibility. US data and BoE-speak awaited. 

GBP/USD Technical Overview

The Relative Strength Index (RSI) indicator on the 4-hour chart holds above 60, suggesting that the bullish bias remains intact. On the upside, 1.3630 (static level) aligns as an immediate resistance level ahead of 1.3700 (static level, round level) and 1.3740 (static level).

Looking south, support levels could be seen at 1.3580 (static level), 1.3530 (100-period Simple Moving Average) and 1.3500 (static level, round level).

Fundamental Overview

Risk flows continued to dominate the action in financial markets in the first half of the day on Tuesday as investors cheered news of the Iran-Israel ceasefire. As a result, the US Dollar (USD) struggled to find demand and allowed GBP/USD to push higher.

In the American session, Federal Reserve Chairman Jerome Powell's cautious comments on policy-easing helped the USD find a foothold. Powell told the House Financial Services Committee that they are not in a rush to cut rates, noting that they expect a meaningful increase in inflation this year because of tariffs.

Meanwhile, Bank of England (BoE) Governor Andrew Bailey told the Lords Economic Affairs Committee on Tuesday that they are starting to observe labor market softening. Additionally, BoE Deputy Governor Dave Ramsden said that if evidence becomes stronger that inflation will undershoot the target, they can speed up rate cuts. Although these comments failed to trigger an immediate market reaction, they might be contributing to GBP/USD's indecisive action midweek.

The economic calendar will not feature any high-impact macroeconomic data releases later in the day. Hence, investors could react to changes in risk perception. In case Wall Street's main indexes correct lower following Tuesday's risk rally, the USD could gather strength and make it difficult for GBP/USD to hold its ground.