GBP/USD Price Forecast: Maintains constructive uptrend above 1.3500 despite mild losses

GBP/USD posts modest losses near 1.3535 in Thursday’s early European session.
The pair keeps a positive tone above the 100-day SMA, with bullish RSI momentum.
The first downside target to watch is 1.3400; the immediate resistance level is seen at 1.3637.

Lallalit Srijandorn FXStreet

The GBP/USD pair trades with mild losses around 1.3535 during the early European trading hours on Thursday. Markets might turn cautious ahead of the UK Gross Domestic Product (GDP) report and the US Retail Sales data, which are due later on Thursday.

Traders raise their bets on rate hikes from the Bank of England (BoE) this year, given the expected impact on inflation from higher oil prices. Money markets are fully pricing in a hike by the November policy meeting, with a second rate hike priced in by April 2027, according to Reuters. Prior to the US-Iran war, traders had been expecting the BoE to lower interest rates twice this year.

Technical Analysis:

In the daily chart, GBP/USD extends its advance above the 100-day simple moving average (SMA) and comfortably above the 20-day Bollinger middle band, which together reinforce a bullish near-term bias. The pair is now pressing the upper Bollinger band around 1.3534, suggesting a stretched but still constructive upswing, while the Relative Strength Index (14) at about 65 hints at firm bullish momentum that is edging toward overbought territory rather than outright exhaustion.

On the downside, immediate support is seen at the 100-day SMA at 1.3400, with the Bollinger middle band at 1.3325 providing a deeper cushion if a corrective pullback unfolds. A more pronounced decline would likely target the recent volatility floor around the lower Bollinger band near 1.3117. On the upside, the first upside barrier emerges at the May 8 high of 1.3637. Any follow-through buying above this level could pave the way to the 1.3700 psychological level.

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

Pound Sterling FAQs

What is the Pound Sterling?

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).

How do the decisions of the Bank of England impact on the Pound Sterling?

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.

How does economic data influence the value of the Pound?

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.

How does the Trade Balance impact the Pound?

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.

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

GBP/USD bounces to 1.3550 on USD retreat

GBP/USD rebounds to test 1.3550 at the start of a new week, reversing a part of Friday's heavy losses to over a one-week trough. The pair draws support from renewed US Dollar weakness, but lacks bullish conviction amid looming US-Iran geopolitical risks.

EUR/USD edges higher to near 1.1600 ahead of German CPI data

EUR/USD gathers strength to near 1.1600 in European trading hours on Monday. The US Dollar pulls back despite hawkish remarks from Federal Reserve Chair Kevin Warsh. Traders will now take cues from the preliminary reading of Consumer Price Index inflation data from Germany, which is due later on Monday.

Gold holds recovery near $4,450; still cautious

Gold holds its recovery near $4,450 in the European session on Monday, moving away from sub-$4,400 levels, though the upside potential seems limited. A softer US Dollar offers some support to the precious metal and helps recover its intraday losses. Meanwhile, Fed Chair Kevin Warsh's comments on curbing inflationary pressures on Friday lifted bets for a rate hike, which might keep a lid on any meaningful recovery for the non-yielding bullion.

Dogecoin whales take profits as rally loses momentum

Dogecoin trades near key support around $0.081 after declining more than 12% last week. On-chain data suggests some whale wallets are taking profits after DOGE’s recent surge. Meanwhile, derivatives data points to mild underlying strength, while technical indicators suggest bullish momentum is losing strength, leaving the meme coin’s near-term outlook mixed.

Iran’s IRGC claims it shot down US drone, attacked UAE air base

Iran’s Islamic Revolutionary Guard Corps (IRGC) shot down a US MQ-9 drone over the Strait of Hormuz using air defense missiles, causing it to crash into Gulf waters, Mehr news agency reported on Monday.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.