Key Highlights
- GBP/USD started a downside correction from 1.3870.
- A declining channel or a possible bullish flag is forming with support at 1.3600 on the 4-hour chart.
- EUR/USD trimmed some gains and traded below 1.1880.
- The UK Services PMI could remain stable at 54.3 in Jan 2026.
GBP/USD Technical Analysis
The British Pound rallied above 1.3650 and 1.3750 against the US Dollar. GBP/USD even climbed above 1.3850 before the bears appeared.
Looking at the 4-hour chart, the pair traded as high as 1.3869 and recently saw a downside correction. There was a drop below the 1.3800 and 1.3750 levels. The pair declined below the 38.2% Fib retracement level of the upward move from the 1.3342 swing low to the 1.3869 high.
It found bids near the 1.3640 zone. Immediate support could be 1.3645. The first major area for the bulls might be near 1.3600 or the 50% Fib retracement level of the upward move from the 1.3342 swing low to the 1.3869 high.
There is also a declining channel or a possible bullish flag forming with support at 1.3600. The main support sits at 1.3550 and the 100 simple moving average (red, 4-hour), below which the pair might test the 200 simple moving average (green, 4-hour).
If there is a fresh increase, the pair could face resistance near 1.3750. The first key hurdle could be 1.3800. The next stop for the bulls might be 1.3860, where they could face hurdles. A close above 1.3860 could open the doors for more gains. In the stated case, the bulls could aim for a move toward 1.4000.
Looking at EUR/USD, the pair corrected some gains and tested the 1.1780 support. It is now stuck in a range and facing hurdles near 1.1850.
Upcoming Key Economic Events:
- UK Services PMI for Jan 2026 – Forecast 54.3, versus 54.3 previous.
- US S&P Global Services PMI for Jan 2026 – Forecast 52.5, versus 52.5 previous.
- US ISM Services PMI for Jan 2026 – Forecast 53.5, versus 54.4 previous.
