GBP/USD Price Forecast: Holds medium-term bullish bias above 1.3600
- GBP/USD weakens near 1.3605 in Monday’s early European session.
- The major pair keeps the bullish bias in the medium term above the 100-day EMA.
- The initial support level emerges at 1.3580; the immediate resistance level to watch is 1.3870.
The GBP/USD pair trades on a softer note around 1.3605 during the early European session on Monday. Growing expectation of the Bank of England’s (BoE) interest-rate cut weighs on the Pound Sterling (GBP) against the Greenback.
The BoE was widely expected to leave interest rates unchanged at 3.75%, but the number of Monetary Policy Committee (MPC) members supporting keeping rates unchanged was lower than the seven expected by markets.
“We continue to expect the next rate cut in March. After that, we think the BOE will deliver a prolonged pause before resuming policy normalization in early 2027 (we see a terminal rate of 3.00% by mid-2027),” said Dani Stoilova, UK and Europe economist at BNP Paribas Markets 360.
Technical Analysis:
In the daily chart, GBP/USD holds above the100-day EMA, preserving a bullish bias. Dips would find demand while above this average. Bollinger Bands show price tracking above the middle band as the envelopes widen, pointing to rising momentum. RSI at 52 (neutral) stabilizes above the 50 line, keeping a modest upside tilt.
Maintaining traction over the 20-day middle band at 1.3580 would keep the topside in focus, with the upper Bollinger Band capping at 1.3870. A pullback below that pivot would expose 1.3290 at the lower band as the next sizeable support.
(The technical analysis of this story was written with the help of an AI tool.)
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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