GBPUSD volatility has decreased recently, which has left the popular currency pair range trading at the higher end of its 2025 trading band between lows of 1.3233 seen on April 23rd and yearly highs of 1.3444 seen on April 28th, with traders delaying decisions on any significant directional commitments to account for President Trump’s 90 day tariff pause and to digest potential progress updates on a US/UK trade deal.
However, this period of relative calm may be about to face a sterner challenge across the rest of this week after President Trump outlined a plan on Sunday to place 100% tariffs on movies made overseas, which brought this topic back to the forefront of trader thinking, and Monday’s important ISM Services PMI showed the US economy to potentially be on a more solid footing, resulting in US yields pushing higher.
Scheduled events this week may also carry significance importance for the direction of GBPUSD, with the next Federal Reserve (Fed) Interest Rate Decision (1900 BST Wednesday) and Press Conference (1930 BST Wednesday), followed 18 hours later by the Bank of England (BoE) Interest Rate Decision (1200 BST Thursday) and Press Conference (1230 BST Thursday).
The Fed are expected to defy President Trump and leave rates unchanged, while the BoE are expected to cut 25bps (0.25%), so these outcomes may not be a major surprise to FX traders. However, what may be more relevant is the update to thinking about future interest rate moves. For example, regarding the Fed, could Chairman Powell indicate a June rate cut could be a possibility, or is it still way too soon for that?
Regarding the BoE, are all policymakers aligned on a 25bps rate cut, or are some pushing for a more aggressive move to help the UK economy through the current tariff induced stress? Governor Bailey could be quizzed harder in the press conference on whether a June rate cut is now a distinct possibility.
The answer to all these outstanding issues could pave the way for a busy week of trading for GBPUSD and other key FX markets.
Technical Update: Using Bollinger Bands To Support Trading Decisions
We have previously highlighted Bollinger bands in past commentaries, showing bands widening to reflect increasing price volatility and bands contracting as price volatility decreases.
Price consolidations can be seen during periods of decreasing volatility, often after they have previously moved more actively within an up or a downtrend.
During the period between April 7th to April 28th 2025, GBPUSD enjoyed a sustained phase of price strength, which also saw increasing positive price volatility, reflected by Bollinger bands widening during this time, as can be seen in the chart below.
However, most recently, as we approach both the Fed and BoE interest rate decisions, a consolidation in price has emerged. This decrease in recent positive price volatility has been reflected by Bollinger bands contracting, as can be seen on the next chart below.
Looking forward to the remainder of this week, how may Bollinger bands aid us from a technical perspective when assessing GBPUSD price action moving into the key interest rate announcements? and perhaps more importantly, how will they aid us after what has the potential to be important market news?
Potential Signs of Uptrend Resumption Using Bollinger Bands:
It might be argued that GBPUSD is still currently trading within an uptrend, as the Bollinger mid-average is moving higher, within the current price activity. This mid-average currently stands at 1.3281 and may well be described as a possible support level within the current price consolidation.
While of course, there is no guarantee the mid-average will continue to act as a support to current price weakness, if it does remain intact, traders may feel support is holding further declines in price, which may lead to fresh attempts to resume the uptrend.
However, once both the Fed and BoE announcements are known, if a more sustained phase of price strength is to materialise, we may well need to see Bollinger bands starting to widen once more, reflecting the potential for increasing positive price volatility within an uptrend, for attempts to push to higher levels.
Within such a backdrop, potential could shift towards a more sustained phase of strength to test 1.3444, the April 28th high, possibly then even towards 1.3748, the January 2022 failure high.
Potential Signs of a Downtrend Developing Using Bollinger Bands:
As we have said, a rising Bollinger mid-average can suggest an uptrend in price and even reflect a support level to price weakness, during a consolidation. Therefore, the 1.3281 current level of the mid-average, should be monitored over coming days.
It might be suggested that a close below the mid-average, followed by it turning lower might suggest a possible downtrend is emerging, which could point to the potential for a more extended phase of price weakness.
If Bollinger bands are then seen to widen within any new possible downtrend, risks might then turn towards a deeper decline in price to 1.3163, the 38.2% Fibonacci retracement of April 2025 strength, possibly even 1.3077, the deeper 50% level.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
However, this period of relative calm may be about to face a sterner challenge across the rest of this week after President Trump outlined a plan on Sunday to place 100% tariffs on movies made overseas, which brought this topic back to the forefront of trader thinking, and Monday’s important ISM Services PMI showed the US economy to potentially be on a more solid footing, resulting in US yields pushing higher.
Scheduled events this week may also carry significance importance for the direction of GBPUSD, with the next Federal Reserve (Fed) Interest Rate Decision (1900 BST Wednesday) and Press Conference (1930 BST Wednesday), followed 18 hours later by the Bank of England (BoE) Interest Rate Decision (1200 BST Thursday) and Press Conference (1230 BST Thursday).
The Fed are expected to defy President Trump and leave rates unchanged, while the BoE are expected to cut 25bps (0.25%), so these outcomes may not be a major surprise to FX traders. However, what may be more relevant is the update to thinking about future interest rate moves. For example, regarding the Fed, could Chairman Powell indicate a June rate cut could be a possibility, or is it still way too soon for that?
Regarding the BoE, are all policymakers aligned on a 25bps rate cut, or are some pushing for a more aggressive move to help the UK economy through the current tariff induced stress? Governor Bailey could be quizzed harder in the press conference on whether a June rate cut is now a distinct possibility.
The answer to all these outstanding issues could pave the way for a busy week of trading for GBPUSD and other key FX markets.
Technical Update: Using Bollinger Bands To Support Trading Decisions
We have previously highlighted Bollinger bands in past commentaries, showing bands widening to reflect increasing price volatility and bands contracting as price volatility decreases.
Price consolidations can be seen during periods of decreasing volatility, often after they have previously moved more actively within an up or a downtrend.
During the period between April 7th to April 28th 2025, GBPUSD enjoyed a sustained phase of price strength, which also saw increasing positive price volatility, reflected by Bollinger bands widening during this time, as can be seen in the chart below.
However, most recently, as we approach both the Fed and BoE interest rate decisions, a consolidation in price has emerged. This decrease in recent positive price volatility has been reflected by Bollinger bands contracting, as can be seen on the next chart below.
Looking forward to the remainder of this week, how may Bollinger bands aid us from a technical perspective when assessing GBPUSD price action moving into the key interest rate announcements? and perhaps more importantly, how will they aid us after what has the potential to be important market news?
Potential Signs of Uptrend Resumption Using Bollinger Bands:
It might be argued that GBPUSD is still currently trading within an uptrend, as the Bollinger mid-average is moving higher, within the current price activity. This mid-average currently stands at 1.3281 and may well be described as a possible support level within the current price consolidation.
While of course, there is no guarantee the mid-average will continue to act as a support to current price weakness, if it does remain intact, traders may feel support is holding further declines in price, which may lead to fresh attempts to resume the uptrend.
However, once both the Fed and BoE announcements are known, if a more sustained phase of price strength is to materialise, we may well need to see Bollinger bands starting to widen once more, reflecting the potential for increasing positive price volatility within an uptrend, for attempts to push to higher levels.
Within such a backdrop, potential could shift towards a more sustained phase of strength to test 1.3444, the April 28th high, possibly then even towards 1.3748, the January 2022 failure high.
Potential Signs of a Downtrend Developing Using Bollinger Bands:
As we have said, a rising Bollinger mid-average can suggest an uptrend in price and even reflect a support level to price weakness, during a consolidation. Therefore, the 1.3281 current level of the mid-average, should be monitored over coming days.
It might be suggested that a close below the mid-average, followed by it turning lower might suggest a possible downtrend is emerging, which could point to the potential for a more extended phase of price weakness.
If Bollinger bands are then seen to widen within any new possible downtrend, risks might then turn towards a deeper decline in price to 1.3163, the 38.2% Fibonacci retracement of April 2025 strength, possibly even 1.3077, the deeper 50% level.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.