Can GBP/USD break resistance after US Treasury liquidity buyback expansion?

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Pound Sterling vs Dollar up 0.57% today

Highlights

The US Treasury Department doubled the size of its liquidity support buyback operations for longer-dated nominal coupon securities, increasing bond market liquidity.
This policy shift weakened the US Dollar and increased demand for Pound Sterling, supporting the GBP/USD exchange rate.
GBP/USD trades in a strong uptrend with technicals indicating overbought conditions, expected to stay within the $1.3541 to $1.3677 range for the next 2 to 3 sessions.

US buyback expansion boosts sterling amid dollar liquidity shift

The primary driver for GBP/USD today is the US Treasury Department's move to double the size of its liquidity support buyback operations for longer-dated nominal coupon securities, as reported by Fxstreet. This tactical shift increases the US government's buyback activity in the Treasury market, effectively weakening the US Dollar by boosting liquidity and demand for US government bonds, thereby making Pound Sterling more attractive against the Dollar. The resulting currency flow reflects the impact of this policy decision, which has supported the current sentiment in favor of Sterling.

Momentum accelerates as overbought signals test technical barriers

Technically, GBP/USD is trading above its MA-20 at 1.3553 and MA-50 at 1.3546 on the hourly chart, as well as above the daily MA-200 at 1.3441. The Ichimoku Kijun level at 1.3577 is providing immediate support. Momentum indicators, including both MACD and ADX, confirm ongoing buyer strength, while RSI stands at an elevated 84.41. Stoch RSI and CCI are also deeply overbought, reflecting extended buying conditions. Bull/Bear Power confirms buyers firmly dominate short-term momentum, and the Awesome Oscillator is aligned with the prevailing uptrend.

Bullish outlook persists as range resistance challenges further gains

Over the next two to three sessions, GBP/USD is expected to trade within a range of 1.3541 to 1.3677, as typical volatility bands limit both upside and downside moves. The probability for a continued rise is very high, with little likelihood of a near-term correction. A break above 1.3677 would signal further upside potential, while a slide below immediate support at 1.3577 would open the door for a deeper retracement toward the lower bound of the current range.

Viktoras Karapetjanc, analyst at Traders Union, sees the US Treasury’s expanded buyback program as a pivotal support for GBP/USD strength. He notes robust technical momentum and a clear fundamental tailwind from recent US policy action. Karapetjanc believes sentiment and macro flows both favor further Sterling appreciation, with buyers in control above key levels. The high probability of continued gains keeps tactical risks limited for now. "With strong demand and consistent policy support, I expect GBP/USD to remain an outperformer in the short term," he says.

Earlier, analysts noted that GBP/USD was supported by strong technical momentum and underlying resilience amid policy uncertainty. The current environment strengthens this outlook, with the US Treasury's expanded buyback operations adding fresh downside pressure on the Dollar and setting up a scenario in which surpassing 1.3677 could trigger an extended Sterling advance.

Source of Data: GBP Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.