GBP/USD July seasonality signals upside but rally may be overextended

GBP/USD faces a critical assessment as July's historically bullish seasonality for sterling clashes with concerns about an already extended rally. Historical data shows July typically favors GBP strength, with the pair averaging positive returns during this month over the past decade. However, current technical indicators suggest the recent advance may have pushed the pair into overbought territory, raising questions about further upside potential. The analysis also highlights movements in EUR/USD, USD/JPY, and AUD/USD as traders navigate shifting currency dynamics. Key resistance for GBP/USD sits at recent highs near 1.2750, while support emerges around 1.2650. Market participants are weighing seasonal patterns against technical exhaustion signals and fundamental drivers including UK economic data and Bank of England policy expectations. The confluence of positive seasonality with stretched positioning creates a challenging environment for directional trades, suggesting potential consolidation or measured advances rather than aggressive continuation.