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GBP/USD Price Prediction: Dollar Rises as GBP Is Affected by Inflation and BoE Rate Reduction Pressure

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  • April 17, 2025
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The GBP/USD currency pair has experienced a breather from its recent rally, pulling back to approximately 1.3230 from a high of 1.3300 in six months. Favorable news regarding US-Japan trade negotiations has boosted the US Dollar, while disappointing inflation readings in the UK have fueled expectations for possible interest rate reductions by the Bank of England. In spite of the pullback, the short-term GBP/USD outlook is bullish, with all short-to-long Exponential Moving Averages (EMAs) moving upwards and robust bullish momentum signaled by the 14-day Relative Strength Index (RSI). A breakout above 1.3292 may propel the pair to higher levels, but a fall below 1.3164 may initiate further drops. KEY LOOKOUTS •  The positive development in US-Japan trade negotiations has brought relief to the US Dollar, which has recovered and witnessed bids. The US Dollar Index (DXY) moving up towards 99.50 may add further pressure on GBP/USD in the short run. •  UK’s soft inflation figures, especially in services, and a bleak jobs market outlook are raising hopes that the Bank of England will choose to cut interest rates, which could press down on the Pound. • The GBP/USD currency pair is in a general uptrend with the support of rising Exponential Moving Averages (EMAs) and a robust V-shape recovery in the 14-day RSI, indicating that the pair may continue to rise if it surmounts recent highs. • Look for possible price reaction at 1.3292 (April 16 high) for a potential shift to 1.3430 and 1.3500. Alternatively, a fall below 1.3164 (April 15 low) may extend the decline, with 1.3063 and the psychological 1.3000 mark serving as major support. GBP/USD pair is facing a brief slowdown in its rally, retreating to near 1.3230 after hitting a six-month peak of 1.3300. This pullback is against the backdrop of firming US Dollar demand, fueled by upbeat news in US-Japan trade negotiations, which has assisted the US Dollar in its recovery. In contrast, weak UK inflation data and a less rosy labor market forecast have fueled hopes of possible interest rate reductions by the Bank of England, which may put further pressure on the Pound. This notwithstanding, the short-term GBP/USD outlook is bullish, with the rising Exponential Moving Averages (EMAs) and a robust bounce in the 14-day RSI pointing to the possibility of the pair reversing its downward bias and returning to upward traction should it reclaim above the 1.3292 level. But a fall below 1.3164 will stimulate further downside action, with 1.3063 and 1.3000 being crucial supports. GBP/USD has pulled back to 1.3230 from a high of 1.3300, as the US Dollar gains strength due to favorable US-Japan trade talks. Soft UK inflation figures and hopes of Bank of England rate cuts weigh on the Pound, although the short-term outlook remains bullish if the pair is able to break above 1.3292. • The GBP/USD pair pulled back to 1.3230 from a six-month high of 1.3300, indicating a halt in the recent rally. •  The US Dollar has benefited as US-Japan trade negotiations improved, sending the US Dollar Index (DXY) to close to 99.50. •  UK inflation data, particularly in the services sector, has raised hopes for possible interest rate reductions by the Bank of England. •  The dismal UK labor market forecast, coupled with tepid inflation, increases the chances of the Bank of England relaxing its monetary policy to spur the economy. •  In spite of the retreat, the overall GBP/USD outlook is bullish, with the Exponential Moving Averages (EMAs) rising and hinting at further bullish momentum. •  The 14-day Relative Strength Index (RSI) has made a V-shaped recovery, which indicates that bullish momentum may continue. •  A move above 1.3292 may take GBP/USD to higher levels such as 1.3430 and 1.3500, and a fall below 1.3164 may take it lower with 1.3063 and 1.3000 being support levels. The GBP/USD currency pair has seen a pullback from its recent six-month high of 1.3300, falling back to 1.3230 as the US Dollar strengthens. This Greenback strength is largely due to favorable news in US-Japan trade talks, which have eased fears over global economic uncertainty. The US Dollar Index (DXY) has also recovered to the vicinity of 99.50, which represents the increasing confidence that the US is moving away from intensifying trade tensions. Investors are more confident now that the US will concentrate on bilateral deals instead of pursuing additional trade wars, thereby providing the US Dollar with a strong support. GBP/USD DAILY PRICE CHART CHART SOURCE: TradingView While that, the Pound Sterling continues under pressure as gentle inflation numbers in the UK have teased hopes of interest rate reductions by the Bank of England. The UK services sector inflation eased to 4.7% in March from 5% in February, which may encourage the Bank of England to unwind its monetary policy to fuel growth in the economy. Additionally, a challenging labor market outlook suggests that UK employers may reduce hiring, further impacting the strength of the Pound. Despite these challenges, the overall sentiment for GBP/USD remains cautiously positive, as the pair has shown resilience, supported by market expectations of future upside potential. TECHNICAL ANALYSIS GBP/USD remains in an overall bullish trend, supported by rising Exponential Moving Averages (EMAs) across various timeframes, indicating upward momentum. The 14-day Relative Strength Index (RSI) has exhibited a V-shaped bounce, going from 40.00 up to almost 70.00, indicating strong buying pressure and sustained bullish momentum. The critical technical levels to monitor are 1.3292, the April 16 high, which would trigger further appreciation towards 1.3430 and 1.3500 if broken. On the negative side, a drop below 1.3164 (the April 15 low) might initiate a retracement to 1.3063 and the psychological barrier of 1.3000, where support is likely to be found. In general, the technical indicators suggest a cautiously positive near-term scenario for the pair. FORECAST GBP/USD pair might renew its bullish trajectory if it can break over the recent high of 1.3292 on April 16. Breaking above that mark would set the pair up to move higher, potentially toward the

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Currencies GBP/USD

GBP/USD Resists Below 1.3000 as US Dollar Weakness and Central Bank Prudence Take Hold

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  • March 18, 2025
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The GBP/USD currency pair continues to resist below the 1.3000 level due to a weak US Dollar amidst growing economic risks and prudent central bank expectations. As the pair trades around 1.2970, bears seem to have limited room as the Greenback grapples with weak US retail sales reports and fresh trade tensions. Investors believe the Federal Reserve will leave policy unchanged at the meeting on Wednesday, and similarly, the Bank of England is expected to leave interest rates untouched on Thursday. These moves combined with the BoE’s recent reluctance to try and balance growth worries against inflation worries may support the Pound Sterling further in the short term. KEY LOOKOUTS • Markets broadly expect the Fed to stick with its current interest rate policy, but any hint on future rate direction may influence USD sentiment. • The BoE is expected to keep rates unchanged, with attention on dealing with inflation risks while facing low growth and revised expectations. • Subpar retail sales figures, Trump’s tariff warning, and escalating economic uncertainty are still dragging down the Greenback, constraining its recovery. • The pair is still supported around 1.2970, with minimal downside pressure. A breakout above 1.3000 may indicate additional bullish momentum if USD weakness continues. Traders are keenly observing major economic and policy events this week that may influence the direction of GBP/USD. The Federal Reserve interest rate decision on Wednesday is likely to keep the current stance, but any indication of future monetary policy may influence the US Dollar. In the same vein, the Bank of England’s Thursday meeting is expected to keep rates unchanged, marking a conservative stance against ongoing inflation and decelerating growth. In contrast, the US Dollar continues to struggle with softer-than-expected retail sales figures and escalating trade tensions, capping its potential for recovery. These combined factors collectively favor the Pound, with GBP/USD remaining firm around 1.2970 and targeting a possible breakout above the 1.3000 level. GBP/USD is stable around 1.2970 as the US Dollar falters with soft economic data and trade tensions. Investors look forward to major policy decisions by the Fed and Bank of England that might propel further action. A break above 1.3000 could be an indication of fresh bullish push for the pair. • GBP/USD hovers around 1.2970, backing off but staying strong below the pivotal 1.3000 level. • US Dollar is still susceptible to weakness with poor economic numbers and escalating trade tensions. • February US Retail Sales increased just 0.2%, falling short and sparking concerns over consumer spending. • Markets anticipate the Federal Reserve to leave interest rates steady in Wednesday’s policy meeting. • US Dollar Index (DXY) stands near 103.50 but remains exposed to losses. • Bank of England is also likely to keep rates unchanged on Thursday, underpinning GBP strength. • Pound Sterling can also be further supported by the BoE’s conservative approach in the face of inflation and growth worries. The GBP/USD currency pair is maintaining its ground as market attention turns to pivotal central bank announcements this week. Investors are monitoring closely the policy meeting of the Federal Reserve, where there is no rate change expected, but the focus is still on the tone of the Fed on future economic conditions. Recent US data, specifically weaker retail sales numbers, has worried investors on the strength of consumer spending and the overall economic prospect. In addition, trade policy and global economic stability uncertainties are weighing on the optimism of investors and putting pressure on the US Doller. GBP/USD Daily Price Chart Chart Source: TradingView Meanwhile, the Pound Sterling is being supported by hopes that the Bank of England will stick with its present interest rate policy when it meets later. The central bank is walking a tightrope between containing sticky inflation and responding to easing economic growth. While the UK economy also has its challenges, the prudent policy stance of the BoE is steadying sentiment towards the British Pound. As both central banks take a wait-and-watch stance, the overall market environment remains influenced by economic data and world events. TECHNICAL ANALYSIS GBP/USD is now consolidating just below the psychological 1.3000 level, with 1.2970 serving as the immediate support area. Any prolonged break above 1.3000 might make way for additional bullish follow-through, perhaps heading higher towards broader resistance levels. Conversely, any break beneath 1.2950 could see near-term selling pressure, but overall, the pair remains in a bullish inclination so long as it remains above key moving averages. Traders will be looking for price action at these levels to confirm the next direction. FORECAST If the GBP/USD currency pair is able to hold above the 1.3000 psychological level, it could open the way to more upside momentum. A clean break above this level could lead to buyers driving the pair to the next resistance areas around 1.3050 and 1.3100. Bulls around the Pound, backed by the Bank of England’s firm policy direction and the US Dollar’s weakness, may also continue to propel bullish strength. Any sign of dovishness from the Federal Reserve or further disappointing US economic data could also add more to upward pressure on the pair. To the downside, in the event that GBP/USD cannot resist below the 1.2950–1.2970 support zone, the pair might temporarily retreat. A fall below this level could trigger additional losses to 1.2900 or even 1.2850 in the near term. The US Dollar might regain momentum if the Fed turns more hawkish or if risk appetite declines in international markets. Moreover, any unexpected change in the Bank of England’s expectations or poor UK economic indicators may cap the rally potential and pull the Pound back.

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