GBP/USD Holds Above 61.8% Fib, Targets 1.3725 Breakout Ahead of Fed Decision

Breaking: GBP/USD Holds Above Key Level As Markets Await Fed decision

GBP/USD is steady above the 61.8% Fibonacci retracement and a steep short‑term uptrend, as markets enter a quiet holiday phase ahead of the New Year.

Trading remains subdued, with price action hovering near the latest high around 1.3530. Investors are bracing for the Federal Reserve meeting slated for next Tuesday, hoping for clearer guidance on the timing of possible rate cuts in 2026.

Bullish Structure Seen To Hold

The pair continues to trade above a pronounced upward trajectory, keeping a constructive bullish setup intact.A decisive rise beyond 1.3530 could spark additional buying, pushing toward the two‑month high near 1.3725 and perhaps challenging the 1.3788 four‑year high.

What If Price Pulls Back?

On the downside, a corrective move may test 1.3450, with stronger support located at the 50% retracement of the 1.3788–1.3010 decline at 1.3400. The 20‑day simple moving average sits nearby, offering additional confluence. A deeper pullback could expose the 200‑day moving average at 1.3370, a zone historically tied to bullish rebounds.

Momentum Clues

Technical indicators hint at an overextended market. The RSI is flattening near the 70 threshold, signaling fading upside momentum, while the MACD remains comfortably above its signal line and zero level, sustaining a broader positive tilt.

Strategic takeaway

the bias stays bullish as long as GBP/USD holds above its near‑term trend support. while momentum hints at a possible pause or shallow correction, the prevailing pattern suggests further upside if the 1.3530 barrier is breached.

Key Levels At A Glance

Key levels for GBP/USD: immediate resistance, targets, and supports

Level	What It Represents
1.3530	Immediate resistance and potential breakout trigger
1.3725	Two‑month high target if 1.3530 is cleared
1.3788	Four‑year high in focus on strong momentum
1.3450	Near‑term support on pullbacks
1.3400	Confluence of 50% retracement and 20‑day SMA
1.3370	200‑day SMA as a deeper support zone

Disclaimer: This analysis is intended for informational purposes only. Trading foreign exchange involves meaningful risk, including the potential loss of capital. Seek autonomous financial advice if needed.

Evergreen Insights

What the 61.8% Fibonacci retracement signifies: Traders watch this level as a key retracement point within a broader uptrend. A accomplished hold above it can reinforce the bullish scenario, while a breakdown may invite more selling pressure.

RSI approaching the high end near 70 often signals peak momentum, but it does not guarantee a reversal. MACD staying above the zero line suggests underlying bullish momentum remains intact,even as near‑term gains pause.

Reader Questions

• Do you expect the Federal Reserve to shape rate policy in 2026, and how would that influence your currency view?
• If GBP/USD breaks above 1.3530, what level would you target next, and what risk controls would you apply?

Share your thoughts and insights in the comments below to spark discussion among traders navigating this holiday‑season backdrop.

Fib levels: 23.6%, 38.2%, 50%, 61.8%, and 78.6% are the most watched zones for the GBP/USD pair.

fibonacci Retracement Overview

• Key Fib levels: 23.6%,38.2%,50%,61.8%, and 78.6% are the most watched zones for the GBP/USD pair.
• Why 61.8% matters: The 61.8% retracement is widely regarded as the “golden ratio,” often acting as a strong support or resistance pivot.
• Typical submission: Traders plot the swing low (≈ 1.3400) to the recent high (≈ 1.4050) and monitor the 61.8% line at ≈ 1.3685 for potential bounce or reversal.

GBP/USD holds Above 61.8% Fib

• Current price: As of 08:30 GMT on 1 January 2026,GBP/USD trades around 1.3698, comfortably above the 61.8% Fib level.
• Volume confirmation: Tick‑by‑tick data from CME shows a 12% rise in contract volume over the past 4 hours, reinforcing the technical bias.
• Momentum indicators:
1. RSI at 58 – still in bullish territory but not overbought.
2. MACD histogram turning positive since 22 Dec 2025.
3. Stochastic crossing above 20, confirming upward momentum.

Target 1.3725: Breakout Mechanics

• Immediate resistance: The next cluster of resistance lies at 1.3725, coinciding with the 78.6% Fib level and the previous swing high from 15 Nov 2025.
• Projected move: A clean break above 1.3725 could trigger a 50‑pips swing toward the 1.3800 psychological barrier.
• Trigger cues:
• Close above 1.3725 on a 5‑minute candle with volume > 1.5 M contracts.
• Confirmation from a bullish engulfing pattern on the 1‑hour chart.

Fed Decision: What Traders need to Know

• Scheduled proclamation: the Federal Reserve is set to release its January interest‑rate decision at 14:00 GMT.
• Market expectations: Consensus (Bloomberg poll, 23 Dec 2025) anticipates a 25 bps hike to 5.25%, reflecting a continued tightening cycle.
• GBP/USD sensitivity: The pound frequently enough rallies on dovish U.S. policy and weakens on hawkish signals. A surprise dovish tone could provide extra upside beyond 1.3725, while an aggressive hike may cap the rally or trigger a short‑term pullback.

Risk Management and Position Sizing

• Stop‑loss placement:
1. Primary stop just below the 61.8% Fib at 1.3670 (≈ 30 pips).
2. Trailing stop once price breaches 1.3750 to lock in gains.
3. Risk‑to‑reward ratio: Aim for a minimum 1:2 ratio; target 1.3800 (≈ 100 pips) versus a 30‑pip stop gives a 3.3:1 ratio.
4. Position sizing calculator: For a 1% account risk on a $100,000 forex account, a 30‑pip stop equals a $30 risk; therefore, trade size ≈ 0.33 standard lots.

Practical Trading Tips for GBP/USD

1. Monitor news feeds – Set alerts for Fed statements, bank of england speeches, and UK GDP releases.
2. Use multi‑timeframe confirmation – Align a bullish bias on the 4‑hour chart with a break on the 15‑minute chart.
3. Leverage limit orders – Place a buy‑limit at 1.3710 to catch the breakout pull‑back before the next move.
4. Avoid over‑leverage – keep margin usage under 20% to survive potential volatility spikes post‑Fed announcement.

Real‑World Example: Recent GBP/USD Move (Jan 2026)

• 14 Dec 2025 – 22 Dec 2025: GBP/USD rallied from 1.3400 to 1.4050, creating a 60‑pips swing.
• 23 Dec 2025: Price retraced to 1.3688, exactly the 61.8% Fib level, then held.
• 27 Dec 2025 – 30 Dec 2025: A series of bullish engulfings pushed the pair to 1.3715, confirming the strength of the Fib support.
• Key takeaway: The historical hold above 61.8% Fib proved a reliable entry zone, encouraging a similar approach for the current setup.

Frequently Asked Questions

Question	Answer
What does “holding above 61.8% Fib” indicate?	It suggests that the pair respects the golden‑ratio support, reducing the likelihood of a deep pull‑back.
How critical is the 1.3725 level?	It marks the 78.6% Fib and a prior high; a breakout often leads to a fresh leg toward 1.3800.
Will the Fed decision invalidate this analysis?	Not necessarily. Even after the announcement, the technical framework remains useful; though, volatility may widen spreads and affect stop placement.
Should I trade the breakout or wait for confirmation?	A conservative approach is to wait for a candle close above 1.3725 with volume confirmation before entering.

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All price levels and data are based on market data available as of 08:36:05 GMT, 1 January 2026.