GBP/USD Price Forecast: Immediate resistance level emerges above 1.3450
|- GBP/USD edges higher to near 1.3430 in Monday’s early European session.
- Federal prosecutors have opened a criminal investigation into the Fed’s Powell.
- Further consolidation cannot be ruled out in the near term as the RSI hovers around the midline.
- The first downside filter to watch is 1.3358; the immediate resistance level emerges at 1.3458.
The GBP/USD pair attracts some buyers to around 1.3430 during the early European trading hours on Monday. The Greenback weakens against the Pound Sterling (GBP) after Federal Reserve (Fed) Chair Jerome Powell said US President Donald Trump threatened him with a criminal indictment, raising concerns over the central bank's independence.
The US Justice Department served the agency with subpoenas and threatened a criminal indictment over testimony he gave to a Senate committee about renovations to Fed buildings. Powell called the probe "unprecedented" and said he believed it was opened due to him drawing Trump's ire over refusing to cut interest rates despite repeated public pressure from the president.
"This open warfare between the Fed and the U.S. administration ... it's clearly not a good look for the U.S. dollar," said National Australia Bank's head of currency strategy, Ray Attrill.
Traders will closely monitor the UK jobs data later on Tuesday, as they could offer some hints about market expectations for the Bank of England’s (BoE) monetary policy outlook. If the reports show weaker-than-expected outcomes, this could weigh on the Cable in the near term.
Technical Analysis:
In the daily chart, the 100-day EMA is rising and provides support at 1.3358, with price still holding above this longer-term average to preserve the broader upward bias. RSI at 51.90 is neutral and edging higher, signaling momentum stabilizes after the recent pullback. A sustained hold above the average could pave the way for a retest of 1.3458, keeping the recovery path intact.
Price sits just below the Bollinger middle band at 1.3458, while the bands have narrowed, reflecting reduced volatility and a consolidation phase. RSI near 52 corroborates a range-bound tone; a firm push higher would improve upside traction. A close above the midline could open a move toward the upper band at 1.3552, whereas weakness toward 1.3365 would put the lower band in play and risk a deeper pullback.
(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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