1. Fundamental Analysis
🇺🇸 United States Drivers
USD Pressured by Trade War Escalation
• The Trump administration is escalating trade tensions through tariff threats against multiple European countries.
This has caused broad USD selling across global markets.
• Traders are also pricing in the effects of ongoing trade war noise, making the USD vulnerable despite normally supportive macro factors.
Fed Outlook and Political Pressure
• The U.S. administration openly supports a weaker dollar, as stated directly by President Trump.
• Markets expect no immediate Fed easing, but the political landscape favors USD weakness.
Net effect: USD softness supports GBPUSD upside in the short term, but deeper macro uncertainty limits trend conviction.

🇬🇧 United Kingdom Drivers
Weak UK Economic Backdrop
Although GBP has recently shown pockets of strength, the broader picture remains challenging:
• UK labor market continues to soften.
• Growth outlook remains fragile.
• BOE is expected to maintain a dovish stance in 2026, which caps GBP’s medium-term strength.
Despite this, near-term sentiment is supported by risk off flows away from USD, not UK fundamentals.
Market Reaction in Mid-January
• GBPUSD gained as much as 0.56% on the week as investors sold the dollar amid Greenland-related geopolitical tensions.

2. Technical Analysis
The pair maintains a bullish channel, but correction signals appeared entering the Jan 19 week.
Structure
• GBPUSD is trading inside a bullish channel near 1.3582 as of the later January update.
This structure was already forming as early as Jan 19.
• Although trend remains bullish, price is expected to pull back toward support before any renewed upswing.

Key Support Levels
• 1.3405 → Weekly expected correction target
• 1.3225 → Trend break level; loss of this level cancels bullish setups
• 1.2945 → Deep correction target if downside accelerates

Key Resistance Levels
• 1.3580 – 1.3600 → Immediate upside resistance
• 1.3675 → Breakout confirmation level (upper boundary of bearish channel)
• 1.4245 → Longer-term extension target if 1.3675 clears

Indicator Summary (based on weekly structure)
• Trend: Bullish, but entering a correction
• RSI: Testing resistance line → signals potential bearish pullback
• Moving averages: Showing bullish pressure, indicating dips may attract buyers

3. Trading Scenarios
Bullish Scenario (Favored After Dip)
Trigger: Bounce from 1.3405
• Target 1: 1.3580
• Target 2: 1.3675 (breakout confirmation)
• Target 3: 1.4245 (extended)
• Stop-Loss: Below 1.3225
Rationale:
• Bullish channel support + RSI trendline bounce

Bearish Scenario (Short-Term Correction)
Trigger: Break below 1.3405
• Target 1: 1.3225
• Target 2: 1.2945
• Stop-Loss: Above 1.3580
Rationale:
• Expected weekly correction target from the bullish channel structure

4. Market Sentiment Overview
• Short-term: Mildly bullish due to USD weakness driven by geopolitical factors
• Medium-term: Bearish GBP fundamentals limit sustained upside
• Technical: Market favors a dip then rally pattern, with 1.3405 as the pivotal level