GBP/USD Price Forecast: Pound to Dollar Slips to $1.3435 as Dollar Strengthens, 1.3400 Support in Focus

GBP/USD Slips Toward $1.3435 as Dollar Strengthens

The British pound weakened sharply, with GBP/USD trading near 1.3435, its lowest in more than two weeks after losing 0.65% intraday. Sellers took control as the pair failed to hold above its 21-day SMA at 1.3521 and broke below the 50-day SMA at 1.3470. A firm U.S. Dollar Index (DXY) at 97.70 added pressure, lifting the greenback against all majors after Fed Chair Jerome Powell flagged stretched equity valuations and maintained caution on monetary easing. Momentum indicators confirm bearish control: RSI slipped to 44, while the MACD shows widening red bars after a fresh bearish crossover. Immediate support rests at 1.3400, with the September swing low at 1.3333 next if pressure continues. Resistance is layered at 1.3525, 1.3550, and 1.3600.

Policy Divergence Between BoE and Fed Intensifies Pressure

The policy backdrop remains tilted against sterling. The Bank of England under Governor Andrew Bailey has turned dovish, while the Fed keeps the door open for restrictive policy, allowing the dollar to attract safe-haven inflows. UK PMIs added to the weakness, with September’s composite cooling and reinforcing the risk that Britain’s fragile economy could underperform. Powell’s U.S. commentary further widened the gap: his statement that equities look “fairly highly valued” supported the case for a stronger dollar, underpinning downside momentum in GBP/USD. Unless UK data surprise to the upside, the policy divergence suggests further risk toward 1.34 or below.

Sterling’s Technical Landscape Shows Sellers in Control

The technical picture leaves little doubt that momentum is bearish. Having broken below both short- and medium-term moving averages, GBP/USD is tracking toward 1.3400, where a break could accelerate losses into 1.3333. The 21-day SMA at 1.3521 is now a first upside test for any rebound, while 1.3600 stands as a critical pivot that bulls would need to reclaim to shift sentiment. Traders watching intraday flows note that volumes have risen as the pair tested 1.3450–1.3430, suggesting strong conviction from sellers.

Relative Currency Strength Adds Context

Sterling’s weakness is highlighted by cross-currency performance. The pound lost 0.68% against USD, 0.60% versus AUD, and 0.36% against CAD, while barely holding against the euro with a marginal -0.01% move. The dollar outperformed across the board, posting 0.74% gains versus JPY and 0.66% against EUR. This broad greenback strength emphasizes that cable’s weakness is not isolated but part of a wider dollar resurgence driven by Powell’s tone and renewed market caution.

Macro Headwinds and Inflation Dynamics

Beyond technicals, macro headwinds weigh on sterling. Sticky UK inflation keeps the BoE trapped, unable to pivot aggressively to support growth, yet not tightening enough to defend the pound. Meanwhile, U.S. data shows resilience, with Powell signaling the Fed can afford patience while retaining a hawkish tilt. This combination leaves GBP/USD exposed to downside risk in the short term. Analysts note that if sterling loses the $1.34 handle, momentum could drag the pair toward $1.30–$1.32 levels into Q4, especially if U.S. data remains firm and UK growth cools further.

Buy, Sell, or Hold on GBP/USD?

With GBP/USD trading at 1.3435, bearish momentum intact, and the macro backdrop unfavorable, the balance of risks points to further downside. The inability to reclaim 1.3521 suggests sellers are in control, and a test of 1.3400 appears likely in the near term. Unless UK data or BoE communication shifts significantly, rallies toward 1.3550–1.3600 are likely to be sold into. On current evidence, GBP/USD is a Sell, with downside targets at 1.3400 and 1.3333 before a potential stabilization zone.

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