GBP/USD Price Forecast: Extends decline below 20-day EMA

GBP/USD slides to near 1.3500 amid strength in the US Dollar.
The odds of the Fed delivering at least one interest rate hike this year have increased.
Investors await the UK Q1 GDP data, which will be released on Thursday.

Sagar Dua FXStreet

The GBP/USD pair is down 0.25% to near 1.3500 during the European trading session on Wednesday. The Cable faces selling pressure as the US Dollar (USD) trades firmly due to growing expectations that the Federal Reserve (Fed) will deliver at least one interest rate hike this year.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.19%	0.25%	0.11%	-0.02%	-0.16%	0.37%	0.12%
EUR	-0.19%		0.04%	-0.09%	-0.24%	-0.37%	0.16%	-0.10%
GBP	-0.25%	-0.04%		-0.15%	-0.27%	-0.39%	0.14%	-0.15%
JPY	-0.11%	0.09%	0.15%		-0.12%	-0.26%	0.24%	0.01%
CAD	0.02%	0.24%	0.27%	0.12%		-0.14%	0.39%	0.14%
AUD	0.16%	0.37%	0.39%	0.26%	0.14%		0.53%	0.26%
NZD	-0.37%	-0.16%	-0.14%	-0.24%	-0.39%	-0.53%		-0.27%
CHF	-0.12%	0.10%	0.15%	-0.01%	-0.14%	-0.26%	0.27%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.2% higher to near 98.50.

According to the CME FedWatch tool, the odds of the Fed delivering at least one interest rate hike this year have increased to 35.6% from 23.5% seen before the United States (US) Consumer Price Index (CPI) data release.

The data showed on Tuesday that the US headline CPI grew at a stronger pace of 3.8% Year-on-Year (YoY) compared to 3.7% estimates and the previous reading of 3.3%.

In the United Kingdom (UK), investors await the Q1 Gross Domestic Product (GDP) data, which will be released on Thursday. According to estimates, the UK economy expanded strongly by 0.6% against a 0.1% growth seen in the last quarter of 2025.

GBP/USD technical analysis

GBP/USD trades lower at around 1.3500, keeping a mildly bearish near-term bias as it holds below the 20-day Exponential Moving Average (EMA) at 1.3530 after failing to break above the 61.8% Fibonacci retracement of the latest swing at 1.3602.

The Relative Strength Index (RSI) at 49.6 hovers around the neutral line, hinting at waning upside momentum and suggesting rallies could remain capped while price stays under this immediate confluence of dynamic and Fibonacci resistance.

On the topside, initial resistance emerges at the 50.0% retracement level around 1.3518, closely followed by the 20-day EMA at 1.3530, with further hurdles at the 61.8% retracement near 1.3602 and then 1.3721 and 1.3873, corresponding to the 78.6% and 100% retracement levels. On the downside, first support is seen at the 38.2% Fibonacci retracement around 1.3434, ahead of a deeper floor at the 23.6% level near 1.3331, while a break below there would expose the structural anchor around 1.3163.

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

Economic Indicator

Gross Domestic Product (QoQ)

The Gross Domestic Product (GDP), released by the Office for National Statistics on a monthly and quarterly basis, is a measure of the total value of all goods and services produced in the UK during a given period. The GDP is considered as the main measure of UK economic activity. The QoQ reading compares economic activity in the reference quarter to the previous quarter. Generally, a rise in this indicator is bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

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USD/JPY pulls back from three-week high after failing near 159.00

USD/JPY edges lower during the Asian session on Friday, stalling its recent strong move to a three-week high of 159.00 as Japanese Yen bears turn cautious amid intervention fears. Meanwhile, the US Dollar retains a strong bullish undertone as the Fed's hawkish outlook and oil-driven inflation fears continue to push US bond yields to multi-year peaks. Furthermore, the BoJ's dovish rate hike last week might cap JPY and support spot prices.

Gold treads water below $4,300

Gold grabs some buying attention and advances marginally at the end of the week, partially retracing the weekly decline, although it is still navigating below the key $4,300 mark per troy ounce. The fresh selling bias on the Greenback and the modest decline in US Treasury yields appear to support the humble advance in the precious metal.

Week ahead: Rate hike bets face a crucial data week

Despite the solid drop from the mid-September high, oil prices remained in the driver’s seat for another week, setting the tone in financial markets. Six months have passed since the late-February start of the US-Iran conflict, and there is still no breakthrough in the stalled talks, despite pressure from regional leaders and the rest of the world.

CFTC Report: Defensive currency positioning takes hold

The week in one sentence: Sterling and Euro shorts deepened in the week to September 22, while Yen longs were cut sharply. Oil positioning improved despite a steep price decline, and Gold exposure remained crowded. The main signal was a more defensive currency positioning backdrop.

Fed vs BoJ: Both hiked. The market only believes one of them – and the chart shows which

The Fed and the BoJ have just done something remarkably similar. Both central banks raised interest rates by 25 bps last week, both are confronting inflation risks, and both signal that future decisions will depend on incoming economic data.