Daily fair value gap supports GBP, incoming new highs ahead

• GBP/USD extend gains as persistent Dollar weakness fuels upside momentum.
• Technical structures on pound show bullish confirmations with support from Fair Value Gaps.
• All eyes on incoming high impacts news, particularly, ECB decision, ISM data, and NFP could shift the market tone sharply.

As weakness on the greenback continues to "strengthen" with no signs of sustained or even renewed recovery, Eurozone experiences a boost for upside including GBP/USD.

Dollar's fragile move increases downside risk

Basing on the Daily Timeframe, U.S. Dollar is having a hard time holding support levels and is currently trading below equilibrium of below the 50% of the range which is not giving the Dollar any help or boost for a recovery. As weakness continues, we could see that the greenback could continue to trade below the 99 level, and potentially, reaching the year-to-date lows.

Pound strengthens thanks to Dollar weakness

Daily

The Daily Fair Value Gap resting between 1.34405 - 1.35180 level is acting as a support for Pound to hold its ground.

Four-hour

The 4-hour price action is also exhibiting bullish confirmation that more highs could be anticipated as GBP/USD has already broken out of the immediate resistance.

This move was also support after the pound was supported by the 4-hour Fair Value Gap at 1.34460 - 1.34573 level. As long as the Dollar is in a sustained weakness and GBP/USD continues to exhibit upside strength, we might see pound to remain on an uptrend trajectory.

Incoming red folders

With the incoming red folders, traders must still be on a cautious state as the volatility could either lift GBP/USD or make the British Pound to a pullback.

What to watch out

• Dollar’s continued breakdown: If DXY breaks below the 99.00 mark, expect further downside pressure on the USD, favoring continued upside for EUR/USD and GBP/USD.
• Pound momentum holding: As long as GBP/USD holds above the 4H FVG (1.34460 - 1.34573), the bullish bias remains intact with potential to retest 1.3600+.
• Volatility risk from red folders: Keep a close eye on high-impact U.S. data (ISM, NFP) and ECB guidance, any surprise could spark sharp reversals or accelerate existing moves.