GBP/USD Price Forecast: Pound Holds 1.3450 as Fed–BoE Split Keeps Bulls Aiming at 1.37

GBP/USD Price: Pound Holds 1.34–1.35 As Fed–BoE Gap Widens

Macro Divergence Keeps GBP/USD Above 1.3400

GBP/USD opens 2026 in the $1.3450–$1.3490 band, supported primarily by central bank divergence. The Fed has already delivered three cuts, taking the target range to 3.50%–3.75%, and markets still price in two more reductions for 2026. That path compresses the yield gap versus other majors and systematically leans against further USD strength. The dollar index trades around 98.20–98.30, trapped in a tight channel and unable to generate a sustained rebound.

On the US macro side, the labor data justifies that dovish bias. The latest NFP added roughly 95k jobs against expectations near 150k, a clear signal that hiring momentum is fading. FedWatch probabilities now show about 85.1% odds of no move in January and 14.9% odds of another 25 bp cut at that meeting. At the same time, the political layer is negative for USD: Trump is set to nominate a new Fed chair when Powell’s term ends in May, and markets broadly assume a more dovish profile, adding an additional discount to the currency.

By contrast, the Bank of England is easing, but not as aggressively. The BoE cut once in December to 3.75%, a three-year low, yet faces inflation near 3.1% while US core PCE runs around 2.8%. That inflation gap limits how fast the BoE can cut compared with the Fed. The result is simple: the policy spread supports GBP and keeps GBP/USD anchored above the mid-1.34s, even with weak UK growth and rising domestic unemployment.

Dollar Structure Around DXY 98.20 Limits GBP/USD Breakout

The US Dollar Index (DXY) bounced from 97.75 and is now coiling in the 98.25–98.35 area, right around a 38.2% retracement band. The 50-period moving average has flattened and the 200-period MA near 98.50 is acting as a hard cap. With RSI parked near 55, momentum is mildly positive but far from impulsive. A decisive break above 98.50 would open 99.00–99.35 and force GBP/USD back toward the low 1.34s. A failure that sends DXY under 98.25 and then 98.00 would instead release upside for GBP/USD through $1.3530. Right now the dollar is caught between easing expectations and safe-haven demand, so it behaves as a drag on the pair rather than a fresh trend engine.

BoE Caution And Sticky Inflation Support The Pound

On the GBP side the driver is relative, not absolute, strength. The BoE’s move to 3.75% is dovish at the margin but nowhere near the Fed’s pace, and inflation at 3.1% keeps the central bank constrained. UK growth is soft, but the policy mix still favors GBP over USD. Positioning also works in sterling’s favor: shorts have been squeezed as UK fiscal risk has eased, and that short-covering is visible in GBP/USD holding above $1.3450 instead of collapsing back into the low 1.33s. Large bank projections cluster between $1.36–$1.40 for 2026, inside a wider expected band of $1.35–$1.47, which confirms a bullish but not euphoric stance on the pair.

GBP/USD Price Action: Consolidation Just Below 1.35

Across the different feeds, GBP/USD converges around the same key zone. Recent 4-hour sequences show the pair rejecting the $1.3530–$1.3534 area and sliding back into $1.3450–$1.3470. Spot trades now around $1.3465–$1.3470, below the recent swing high but still inside a rising channel that has been in place since late November. The market is not pricing a trend reversal; it is digesting a strong November–December advance and testing whether $1.35 becomes a durable floor or stays as overhead resistance.

Layered Support: 1.3468, 1.3430, 1.3400, 1.3365, 1.3285, 1.3010

The first protective layer sits at the nine-day EMA around $1.3468, practically on top of current spot. The next key cluster is the ascending trendline plus 50-day EMA near $1.3430, which has repeatedly served as the main cushion on previous pullbacks. Intraday, $1.3450 acts as a tactical pivot where buy flows have already appeared more than once. A deeper washout would bring the $1.3400 zone into play, where the 100-period moving average on the 4-hour chart held the last wave of selling and printed a clear bullish pin bar. If the market breaks through that area, the next magnets are $1.3365 and $1.3285, which line up with a prior consolidation pocket and the 38.2% and 50% Fibonacci retracements of the latest leg higher. Only below that band does the bigger downside target emerge at $1.3010, the eight-month low where the medium-term bullish narrative for GBP/USD would start to break down.

Overhead Resistance: 1.3500, 1.3530–1.3534, 1.3726, 1.3750

On the topside, resistance is clean and well-defined. The first barrier is the psychological $1.3500 figure, which has already rejected multiple intraday pushes. Just above sits the three-month high at $1.3534, tagged on December 24, and the December swing high around $1.3530. A daily close above $1.3530–$1.3534 would confirm renewed control by buyers and validate the rising channel. Beyond that, the next structural target is the six-month high at $1.3726, with the upper channel boundary around $1.3750. That $1.37–$1.38 pocket represents realistic upside for a first half-year extension if the dollar remains on the back foot.

Trend And Momentum Signals: Bullish Structure, Cooling Speed

Trend indicators still point to a bullish GBP/USD structure even as momentum cools. On the daily chart, the nine-day EMA is firmly above the 50-day EMA, and spot is trading on top of both averages. The 50-day line slopes upward, confirming that the trend from late November is intact. Momentum is split across timeframes. One daily read shows RSI near 62.76, which is bullish and comfortably below overbought territory, leaving room for another leg higher. A more granular 4-hour read has RSI in the low 40s, reflecting a loss of immediate upside energy as the pair backs away from $1.3530. The combination of an up-sloping trend base and cooling short-term momentum is typical consolidation, not reversal. In cross terms, GBP is strongest versus JPY, while gains versus USD are more gradual, which fits a grind-higher profile rather than a spike.

Short-Term Trading Zones And Tactics On GBP/USD

Short-term trade logic revolves around the $1.3430 pivot. One clear tactical setup is a momentum break lower: a confirmed daily close below $1.3430 unlocks a move toward $1.3365, with stops logically placed back above $1.3500. That configuration assumes a temporary failure of the rising channel and a retrace into the 38.2% fib band. As long as $1.3430–$1.3468 continues to hold on closing basis, the higher-probability approach is to treat dips as buy zones. The 100-period MA near $1.3400 and the pin-bar low there form a clean reference for tight-risk long entries back toward $1.3530. The 20-period MA around $1.3482 is a good intraday trigger: repeated failure to reclaim $1.3482–$1.3500 favors re-tests of $1.3450–$1.3430; a sustained break above $1.3500 re-opens the path into $1.3530–$1.3534.

2026 Range Expectations And Macro Context For GBP/USD

Strategically, the consensus for GBP/USD in 2026 is a broad $1.35–$1.47 corridor, with most institutional forecasts stacked in the $1.36–$1.40 pocket. That view is built on a structurally weaker USD under continued Fed easing, a slower and shallower easing path from the BoE, and a persistent risk premium on the dollar from US political noise and Fed leadership uncertainty. At the same time, nobody is pretending the UK is in great shape. Growth remains sluggish, unemployment is drifting higher, and markets expect the BoE to deliver additional cuts later in the year. Those factors cap the upside and argue against a straight rally to the top of the projected band.

Bias And Stance: GBP/USD Still A Buy On Dips Above 1.34

When all the levels and macro inputs are combined, the balance of evidence remains bullish for GBP/USD. Above $1.3430–$1.3400, the rising channel, EMA configuration and RSI profile together point to weakness being an opportunity, not a structural break. The attractive accumulation zone is $1.3430–$1.3365, with value extended down to $1.3285 if the market overshoots. Upside reference points sit at $1.3530–$1.3534 first, then $1.3726–$1.3750, and on a wider 2026 horizon, the $1.40 area that large houses cluster around. Only a sustained move below $1.3285, and especially a slide toward $1.3010, would justify flipping from buy-on-dips to neutral or outright bearish. Until that break occurs, the data set supports one clear, direct stance: GBP/USD is a buy on dips with a clear bullish bias into 2026.

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