GBP/USD Price Forecast - Pound Holds 1.35 as BoE Dovish Drift Meets Tariff-Hit Dollar

GBP/USD: Cable Holds 1.35 As BoE Dovish Drift Meets Tariff-Driven Dollar Risk

Spot Structure And Immediate Price Action In GBP/USD

GBP/USD has extended gains for a fourth straight session, trading around 1.3516–1.3530 and grinding higher inside a tight 1.3467–1.3560 band. Price has been clustering near the 1.3500 handle, with dips toward 1.3470 repeatedly bought and supply building in the 1.3535–1.3560 zone. On the week, the pound is up about 0.28% versus the USD and roughly 0.31% versus the euro, while it has advanced around 1.44% against the yen, confirming that this is not only a dollar story but also a period of relative GBP strength across majors. The pair is retracing from the 1.3035 low into the upper half of its broader range, using 1.3500 as a pivot and treating sub-1.3470 tests as opportunities for accumulation rather than liquidation.

BoE Dovish Hold, 3.25% Endpoint And What It Means For GBP/USD

The Bank of England has kept its policy rate unchanged on a narrow 5–4 vote, a textbook “dovish hold” that cements the next move as lower but avoids signalling an aggressive easing cycle. Markets now expect roughly two cuts in 2026, which would take the Bank Rate down toward 3.25%, and short-term pricing already embeds about 18 basis points of easing ahead of the March 19 meeting. Governor Andrew Bailey has left the door open to a cut as early as March while stressing that services inflation remains uncomfortably high. For GBP/USD, this calibration is crucial: a controlled path from current levels toward 3.25% keeps sterling from collapsing on rate differentials, particularly when other central banks are also leaning toward easing. The message is that the BoE is preparing to cut, but only if wage and services data cooperate, which supports a gradual rather than disorderly repricing of GBP.

Trump Tariffs, Fed Patience And The Dollar Backdrop For GBP/USD

On the US side of GBP/USD, the picture is dominated by trade policy and a cautious Federal Reserve. President Trump has already imposed a broad 10% global tariff and has openly floated an increase toward 15%, reawakening trade-war risk and pressuring the USD through growth and sentiment channels. At the same time, Fed minutes from January and speeches by officials such as Austan Goolsbee, Susan Collins and Thomas Barkin point to a central bank that is not ready to cut quickly. They want clearer evidence that inflation is converging toward the 2% target before they move, and the market currently prices roughly 50 basis points of easing for the year, with no cut expected at the upcoming meeting. The Dollar Index (DXY) is trading near 97.80, leaning on support at 97.64, with the 50-period moving average close to 97.70 and the 200-period near 97.40. A sustained break above 98.07 would expose 98.40, but tariff uncertainty and measured Fed communication are preventing a decisive USD breakout. That combination gives GBP/USD space to hold above 1.3500 as long as sterling does not face a fresh domestic shock.

UK Political Noise And Sterling Volatility Around GBP

Political risk adds a secondary layer to the GBP story. The by-election in Gorton and Denton in Manchester is being treated as a test of Prime Minister Keir Starmer’s grip and Labour’s support. The race is not yet a macro driver for GBP/USD, but it contributes to short bursts of volatility when set against a backdrop of central-bank speculation. Any surprise that questions the stability of the government or the fiscal trajectory can increase intraday swings around key levels like 1.3467 and 1.3535. For now, the market is treating politics as a volatility amplifier rather than the primary trend engine, but it remains a live headline risk as GBP trades near multi-day highs.

Technical Map: Triangle Compression, Key Levels And Structure In GBP/USD

Technically, GBP/USD is trapped inside a maturing triangle on the daily chart, bounded by a rising support line from the 1.3035 low and a descending resistance line anchored near 1.3869. This configuration keeps the broader bias neutral with a mild topside tilt because price is tracking closer to the upper half of the formation and remains above the key moving-average cluster. On the daily and intraday charts, a tight band around 1.3530–1.3540 holds several simple moving averages, forming a congestion zone that bulls must clear to unlock the next leg higher. Immediate resistance sits at 1.3535–1.3560, where the descending trendline and the 200-period moving average converge. Beyond that, upside targets appear at 1.3579, then 1.3622, followed by the 1.3680 region and, on an extended move, the 1.3835 area. On the downside, first support lies at 1.3500, with more meaningful floors at 1.3467, 1.3432 and 1.3402. A break of 1.3400 would expose 1.3383 and start to threaten the integrity of the rising daily trendline, signalling that the current bullish phase has failed and forcing a reassessment of the medium-term bias.

Momentum, Signals And Trade Zones Between 1.3400 And 1.3603 On GBP/USD

Momentum gauges confirm that GBP/USD is consolidating gains rather than topping. On the H4 chart, the MACD signal line is still below zero but slopes higher, indicating that the pair is working through a recovery phase where dips are bought and momentum is rebuilding rather than collapsing. On the H1 chart, the Stochastic line sits above the 50 level and is angled upward, consistent with intraday buying pressure without an extreme overbought signal. Short-term signal frameworks outline a clear operating corridor between 1.3467 and 1.3603. On the downside, 1.3467, 1.3432 and 1.3402 are treated as potential long zones once bullish H1 reversal candles—pin bars, dojis or engulfing patterns with higher closes—appear. Upside levels at 1.3536, 1.3549 and 1.3603 are used as areas where sellers attempt to fade strength if bearish reversal patterns emerge. Risk management in those models is tight, with stops placed just beyond local swing extremes and partial profits typically taken after 25-pip moves. This confirms that the market is trading GBP/USD as a range with breakout potential rather than a clean one-directional trend.

Triangle Resistance, Moving Averages And Breakout Risk In GBP/USD

On the 2-hour chart, GBP/USD sits inside a symmetrical triangle framed by support near 1.3435 and resistance near 1.3535. The 50-period moving average around 1.3500 is acting as a stabiliser under price, while the 200-period moving average near 1.3560 reinforces the overhead cap. Higher lows inside the pattern point to steady, if cautious, accumulation, while the flat ceiling around 1.3535–1.3540 marks the immediate line that buyers must clear. A decisive push through 1.3540–1.3560, especially if accompanied by fresh DXY weakness below 97.70, would point toward a test of 1.3580 first and then the 1.3620–1.3680 band. Failure at that zone keeps the pair locked in the choppy 1.3467–1.3536 corridor and favours continued mean-reversion tactics. The structure tells you that the next 20–30 pips above 1.3540 carry breakout information: either the triangle resolves higher and GBP/USD confirms a new leg up, or the pattern reverts back into range behaviour.

Cross-Market Context: GBP Relative Strength And Implications For GBP/USD

Relative performance tables show that GBP is not only holding its ground versus the USD but also outperforming several peers. This week, the pound is up roughly 0.28% versus the US dollar and about 0.31% versus the euro, while delivering around 1.44% gains against the yen. Moves versus the Canadian dollar, Australian dollar, New Zealand dollar and Swiss franc are more modest but still lean in favour of GBP or remain close to flat. That pattern matters for GBP/USD because it shows that sterling strength is not solely the product of a soft dollar; it reflects a modest re-rating of UK assets as the BoE approaches a gradual easing cycle without alarming markets. As long as GBP holds this relative performance across G10, pullbacks in GBP/USD toward 1.3467–1.3432 are more likely to attract buyers scaling into positions than aggressive sellers trying to break the structure.

Risk Conditions, Liquidity And Strategic Stance On GBP/USD Around 1.35

The broader environment around GBP/USD remains fragile. Several large players are still cautious, liquidity is uneven, and intraday swings around levels such as 1.3467 and 1.3536 can be exaggerated when headlines hit a thin tape. With no high-impact UK or US data drops immediately in play, price is driven by a mix of tariffs rhetoric, Fed commentary, BoE rate expectations and sporadic political headlines rather than hard macro releases. From the 1.35 region, the structure supports a constructive stance rather than a chase. The pair has printed higher lows from 1.3035, is trading above key moving averages, and is pressing a 1.3535–1.3560 ceiling that, if broken, opens space toward 1.3622 and the 1.3680 zone. At the same time, downside reference points at 1.3467, 1.3432 and 1.3400 provide clear risk parameters. Taken together, GBP/USD at current levels deserves a bullish but disciplined view: the pair is best treated as a buy on dips into the 1.3467–1.3430 area with upside targets in the 1.3620–1.3680 band, while a daily close below 1.3400 would downgrade the stance from buy-on-weakness to neutral hold.

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