GBP/USD Price Forecast: Traders seem hesitant amid hawkish Fed and BoE expectations

The GBP/USD pair continues with its struggle to make it through a technically significant 200-day Simple Moving Average (SMA) and seesaws between tepid gains/minor losses through the first half of the European session on Wednesday. Geopolitical uncertainties benefit the US Dollar's (USD) status as the global reserve currency and exert some pressure on the current pair, which reacts little to the latest UK consumer inflation figures. That said, a mixed fundamental backdrop warrants some caution before placing aggressive directional bets.

Reports suggest that diplomatic efforts are underway to introduce a one-month ceasefire mechanism to allow the US and Iran to negotiate on a plan to end the war. This follows US President Donald Trump’s decision to delay planned strikes on Iran's energy infrastructure by five days, fueling hopes for a de-escalation of tensions in the Middle East. The conflict, however, has shown no signs of easing, with Israel continuing its strikes on the Islamic Republic, and the Trump administration has directed thousands of soldiers from the US Army's elite 82nd Airborne Division to the Middle East.

Moreover, Iran fired a new missile barrage at Israel, while Gulf countries also reported repeated drone and missile interceptions, as fighting intensifies in Lebanon and Iraq. This keeps geopolitical risks in play and acts as a tailwind for Crude Oil prices, fueling inflation fears and hawkish US Federal Reserve (Fed) expectations. In fact, traders have nearly priced out the possibility of any further rate cuts by the Fed and are rapidly increasing bets for a hike by the end of this year. The outlook, in turn, assists the USD to attract some buyers and caps the upside for the GBP/USD pair.

Meanwhile, the UK Office for National Statistics (ONS) reported that the headline Consumer Price Index (CPI) rose 3.0% over the year in February, matching the previous month's reading and consensus estimates. However, the core CPI, which excludes volatile food and energy items, came in above market expectations and climbed 3.2% YoY from 3.1% in January. Moreover, the Bank of England's (BoE) hawkish outlook, signaling the potential rate hike as early as April amid inflation fears, offers some support to the British Pound (GBP) and helps limit losses for the GBP/USD pair.

GBP/USD daily chart

Technical Analysis:

The near-term bias is neutral with a slight downside tilt, as spot prices fluctuate just below the 200-day SMA at 1.3433, which caps recovery attempts. The GBP/USD pair is also trading under the 38.2% Fibonacci retracement of the fall from the January swing high, around the 1.3855 area, reinforcing a corrective tone within a broader range.

Meanwhile, the Moving Average Convergence Divergence (MACD) histogram has turned positive while the MACD line moves above the signal line but remains close to the zero mark, hinting at only modest upside momentum. The Relative Strength Index (RSI) around 49 stays near its midline, consistent with a consolidative environment rather than a directional move.

Initial resistance stands at 1.3462, the 38.2% Fibo. level, with a daily close above this level opening the way toward the 50% retracement at 1.3537 as the next upside hurdle. A stronger barrier appears near 1.3612 at the 61.8% Fibo. level, where prior supply and the broader corrective structure could limit gains.

On the downside, immediate support comes from the 23.6% retracement at 1.3369, followed by the recent base area near 1.3220, aligned with the 0% Fibonacci level at 1.3219. A break below 1.3369 would expose that lower band of the range and would weaken the case for a more durable rebound.

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