GBP/USD grinds higher but 1.3450 resistance refuses to budge

• Cable climbed for a fourth straight session on Thursday, but upside momentum is fading near a key resistance zone around 1.3450.
• Hotter-than-expected February PCE data did little to dent the risk rally, though hawkish Federal Reserve minutes linger in the background.
• No UK data on Friday's calendar leaves GBP/USD entirely at the mercy of the March Consumer Price Index release.
• Rate futures show almost no chance of a Fed cut before September, keeping the US Dollar's yield advantage intact.

GBP/USD added 0.31% on Thursday, pushing into the mid-1.3400s as the US-Iran ceasefire continued to weigh on the US Dollar. But the rally is starting to feel laboured. The pair touched 1.3480 earlier in the session before pulling back, and the 1.3400-1.3450 zone is shaping up as a stubborn technical ceiling.

The ceasefire giveth, PCE taketh away

Sterling has been riding the same wave as the rest of the G10: the two-week ceasefire between the US and Iran has crushed the Dollar's safe-haven premium, allowing risk-sensitive currencies to recover from their early-April lows. GBP/USD bounced from around 1.3150 at the start of the month and has now clawed back roughly 300 pips. But Thursday's session showed signs that the easy gains are over. The February Personal Consumption Expenditures (PCE) report, released at 12:30 GMT, showed headline inflation at 2.8% YoY, above the 2.6% consensus. Core PCE ticked to 3.0% YoY, matching forecasts but underlining how far the Federal Reserve (Fed) remains from its 2% target. Monthly readings of 0.4% on both headline and core were firmer than expected. The data did not spark a meaningful Dollar rally, but it planted a seed of doubt about how long the ceasefire-driven selloff in the Greenback can last.

March CPI: the week's main event arrives Friday

Friday's March Consumer Price Index (CPI) release at 12:30 GMT is the most important data point of the week, and arguably the most consequential inflation print in months. Economists expect headline CPI to jump 0.8% MoM, which would push the YoY rate to roughly 3.1%-3.3%, reflecting the initial energy price shock from the Iran conflict. Core CPI is forecast at a more benign 0.2%-0.3% MoM and 2.7% YoY. The distinction between headline and core will be critical. If core CPI comes in soft, markets can argue the inflation spike is energy-driven and temporary, particularly if the ceasefire holds and Oil prices continue to ease. That would be Sterling-positive. But if core surprises to the upside, suggesting that elevated energy costs are already bleeding into broader prices, the Fed's hawkish contingent gains ammunition and the US Dollar could stage a sharp reversal.

GBP/USD daily chart

Technical Analysis:

In the daily chart, GBP/USD trades at 1.3435, holding a bullish near-term bias as spot remains above both the 50-day and 200-day Exponential Moving Averages (EMAs) at 1.3388 and 1.3372 respectively. The alignment of shorter- and longer-term EMAs below price suggests an underlying constructive structure, while the Stochastic RSI around 62 indicates positive but not yet overbought momentum, hinting that buyers still retain control, albeit with scope for consolidation after the recent advance.

On the downside, immediate support emerges at the 50-day EMA near 1.3388, with the 200-day EMA at 1.3372 reinforcing a slightly deeper demand zone should a pullback extend. As long as GBP/USD holds above this EMA cluster, the broader upside tone is likely to persist, and any dips towards these levels may attract fresh buying interest, with the absence of nearby mapped resistance leaving the topside technically open until new highs establish a clearer cap.

(The technical analysis of this story was written with the help of an AI tool.)