GBP/USD Price Forecast: Likely fall further towards 1.3420

The British Pound (GBP) is down 0.1% to near 1.3500 against the US Dollar (USD) during the European trading session on Wednesday. The GBP/USD pair drops as the US Dollar extends its advance, with market participants pricing in a 25 basis points (bps) interest rate hike by the Federal Reserve (Fed) in the policy meeting this month.

At the time of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.13% higher to near 99.78.

The CME FedWatch tool shows there is a 67% chance that the Fed will hike interest rates in the policy meeting this month.

On the British Pound front, Bank of England (BoE) Monetary Policy Committee (MPC) member Catherine Mann has favored an early interest rate hike to counter risks of high inflation projections.

"The research is very clear. It's ​better (for interest rates) to be a ​little bit too high and then, of course, ‌correct ⁠if necessary." BoE’s Mann said in an interview on Tuesday. Mann added, "And that's the underpinnings of the 25 ​basis-point ​hike I ⁠voted for in the last meeting," Reuters reported.

GBP/USD Technical Analysis

GBP/USD trades at 1.3500, maintaining a mildly bearish bias as it holds below the 20-day Exponential Moving Average (EMA) at 1.3537.

The Relative Strength Index (RSI) at about 48 has slipped back toward neutral territory, hinting that bullish momentum has faded without yet signaling oversold conditions.

On the downside, the first notable support emerges near the lower border of the Rising Channel formation at around 1.3418, where buyers may attempt to rebuild a base. On the topside, immediate resistance is defined by the 20-day EMA at 1.3537, and a daily close back above this barrier would ease the current downside pressure and open the door for a corrective recovery toward higher levels.

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

Mann leans hawkish as stronger data keeps GBP supported

The FXS Speechtracker score of 8.4/10, slightly above Mann’s historic 8/10 baseline, signals a modest hawkish tilt in this speech. Emphasizing that it is better for interest rates to be “a little bit too high” and adjusted later reinforces a bias toward keeping policy restrictive for longer, which is supportive for GBP on the margin.

The comment about “somewhat stronger economic activity” since the last MPC meeting further justifies a cautious stance on easing, aligning with the elevated score and underscoring upside risks to inflation persistence. For FX markets, this combination of stronger data and a preference for erring on the side of tighter policy suggests downside in GBP is limited near term, especially versus lower-yielding currencies.