GBP/USD Price Forecast: Trades below 1.3500 on firmer USD, ahead of UK GDP

• GBP/USD remains depressed as oil-driven inflation fears fuel Fed hike bets and support USD.
• Traders might refrain from placing aggressive directional bets ahead of the UK Q2 GDP report.
• The mixed technical setup warrants caution before positioning for the near-term trajectory.

The GBP/USD pair trades with a negative bias for the second consecutive day and trades below the 1.3500 psychological mark during the Asian session on Thursday amid modest US Dollar (USD) strength. The downside potential, however, seems limited as traders might opt to wait for the UK macro data dump, including the Q2 GDP report, before placing directional bets.

In the meantime, inflation risks stemming from volatile oil prices underpin prospects for a rate hike by the US Federal Reserve (Fed). This, along with persistent geopolitical uncertainties due to the US-Iran standoff, assists the USD in building on the previous day's bounce from the post-CPI swing low and turns out to be a key factor acting as a headwind for the GBP/USD pair.

From a technical perspective, spot prices, barring the overnight bullish spike, have been oscillating in a one-week-old range. This might be categorized as a bullish consolidation phase against the backdrop of the rally since late July. Moreover, the GBP/USD pair maintains a mildly bullish near-term bias above the 100-period Simple Moving Average (SMA) on the 4-hour chart.

However, momentum indicators are less supportive. In fact, the Relative Strength Index (RSI) is hovering near the neutral 50 line, and the Moving Average Convergence Divergence (MACD) is slipping slightly below zero. This, in turn, hints at an extension of the consolidative price action rather than strong near-term directional conviction, warranting caution for aggressive traders.

Meanwhile, further weakness below the current pivot area around 1.3491 might prompt some technical selling and make spot prices vulnerable to accelerating the fall to the 100-period SMA near 1.3415. A sustained defence of these supports would keep the bullish bias intact, while a clean break below would expose a deeper corrective phase for the GBP/USD pair on the four-hour chart.

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

GBP/USD 4-hour chart