GBP/USD Price Forecast: Pound Stalls Near 1.36 as BoE Cut Odds Climb

GBP/USD – 1.35–1.38 band under pressure as BoE cut pricing and Starmer risk collide

GBP/USD – Price structure from the 1.3870 failure down to the 1.3500–1.3550 stress zone

GBP/USD trades around 1.36 after a clean rejection from 1.3870, the strongest level since late 2021. The recent intraday band has sat roughly between 1.3508 and 1.3625, with the 1.3550–1.3570 pocket acting as the first meaningful floor. Every push toward 1.37–1.3720 has met supply, locking the pair inside a heavy 1.35–1.38 corridor rather than a sustained breakout trend. A daily close below 1.3550 shifts attention to 1.3500 first and then to the 1.3460 area, where the 50-day moving average is clustered. On the upside, resistance is concentrated at 1.37–1.3720, with 1.3870 marking the line that would signal a genuine re-rating of sterling if it breaks and holds. Right now, price action says the market is not prepared to pay those highs while the BoE is clearly on the verge of easing.

GBP/USD – BoE at 3.75%, a 5–4 split that drags the pair away from 1.3870

The Bank of England left Bank Rate at 3.75%, but the internal split is what moves GBP/USD. Five MPC members backed keeping rates at 3.75%, while four already voted to cut to 3.50%. That 5–4 margin effectively tells you that one or two meetings separate the current stance from the first move lower. Before the decision, markets were pricing roughly 35 bp of BoE easing for 2026; after the vote details hit the tape, that shifted toward about 50 bp. That repricing cheapened sterling across the board and pulled GBP/USD down through 1.36 toward the 1.3550 band in a straight line. A 3.75% policy rate is still restrictive against current UK data, so as long as curves imply more and earlier cuts from the BoE than from the Fed, the pair carries a structural downward tilt on rallies.

GBP/USD – Inflation above 2%, unemployment near 5.1% and why 3.75% looks too tight

UK headline inflation remains above the 2% target but the December release confirmed a downtrend, not a renewed spike. That pattern gives the BoE room to shift focus toward real activity and jobs. Unemployment sits near a four-year high around 5.1%. Payrolls dropped by roughly 43,000 in December and wage growth is rolling over from previous peaks. Under those conditions, a 3.75% Bank Rate is clearly on the restrictive side of the dial. The market is therefore comfortable pricing at least two 25-bp cuts over the next 12 months. That configuration weighs on GBP/USD whenever the day’s story is UK-centric, especially after a failed break above 1.3870 and repeated failures to hold above 1.37.

GBP/USD – Fed path, Kevin Warsh and a dollar that supports the downside but doesn’t crush sterling

On the USD leg, the picture is firm but not explosive. President Trump’s nomination of Kevin Warsh as the next Fed Chair nudged expectations away from an aggressively dovish stance and handed the dollar a short-term boost. At the same time, US data is cooling rather than collapsing. ADP private payrolls fell to around 22,000 in January, far below the 150,000-plus prints seen in hotter quarters. Job openings are trending lower, and initial jobless claims have moved into the mid-200,000s. The futures curve still builds in roughly two Fed cuts in 2026. That means the dollar can rally on risk-off episodes or hawkish soundbites, but it is not set up for a sustained runaway bull market on current numbers. For GBP/USD, the result is straightforward: USD can lean on the pair and help hold it below 1.37–1.3870, but it needs a stronger macro surprise to drive a clean collapse through 1.3330 and down toward 1.30.

GBP/USD – Technical layers: 1.3870 as the ceiling, 1.3550–1.3500 as the defence line and 1.3330–1.30 further below

The broader structure in GBP/USD is defined by a series of failures between 1.3750 and 1.3870 and repeated defences near 1.35. The spike to 1.3870 confirmed where buyers run out of appetite if policy remains on a path to BoE cuts. The sharp slide from the high-1.37s down to just under 1.3550 after the BoE meeting shows how crowded long-sterling positioning was into that region. Technically, 1.3550–1.3570 is the immediate battle line. A sustained break below that area exposes 1.3500 and then 1.3460, where the 50-day moving average sits as the next magnet. Below that, 1.3330–1.3350 is the next meaningful cluster, followed by the psychologically important 1.30 handle on a multi-week horizon. On the topside, 1.37–1.3720 remains the active sell zone, and 1.3870 is the point that would force shorts to reassess if it breaks with conviction.

GBP/USD – Starmer, Mandelson and how UK political noise is building a risk premium into the FX quote

Domestic politics has added a second weight to GBP/USD alongside rate expectations. Peter Mandelson is under UK police scrutiny linked to the Epstein files, and the story is intersecting with Prime Minister Keir Starmer’s leadership narrative. The controversy around Mandelson’s proposed US ambassador role and the renewed focus on his past is raising questions over the stability and judgment of the current team. Any perceived threat to fiscal discipline, to the Chancellor’s position, or to institutional credibility creates an additional political risk premium on UK assets. Markets generally express that premium through weaker GBP, wider gilt spreads versus US Treasuries, and compressed valuation multiples for London-listed names. That pressure showed up directly in GBP/USD, which slipped to 10-day lows below 1.3550 after the BoE meeting as political headlines and dovish rate expectations reinforced each other.

GBP/USD – Cross-check from broader FX: pound still expensive versus PKR while softening against USD

The broader FX board confirms that this is a sterling repricing story versus USD, not a systemic collapse in GBP. In Pakistan’s interbank market, the latest quotes put USD/PKR around 280.60 on the buying side and 282.30 on the selling side. At the same time, GBP/PKR trades near 384.67–388.18. That spread underlines how much more expensive GBP remains against the rupee than USD does. Other Middle Eastern and Asian pairs in the same table, including UAE dirham and Saudi riyal against the rupee, show relatively steady behaviour and narrow daily ranges. This tells you global FX conditions are not in crisis mode. The pressure on GBP/USD is coming from the combination of BoE easing expectations and UK-specific political risk, not from a broad loss of confidence in sterling across the entire currency complex.

GBP/USD – Flow dynamics: who is leaning into 1.37 and who is defending the 1.35 zone

Positioning around GBP/USD has moved from one-way bullish to much more two-sided. The rally toward 1.3870 pulled in momentum accounts, macro funds and discretionary players who liked the carry and the story of a still-firm UK rate path. Once the 5–4 BoE split revealed how close the Committee is to cutting, those crowded longs began to unwind aggressively on any move back toward 1.37. Short-term systematic and discretionary strategies are now consistently selling strength into 1.37–1.3720, typically with stop levels parked above 1.3820 and profit-taking targets around 1.3500 first and 1.3460 after that. On the other side, medium-term capital is reluctant to establish fresh shorts under 1.35 without either a clear escalation in UK political stress or a decisive upside surprise in US data. That leaves 1.3500–1.3550 as a contested band where mean-reversion interest meets breakout selling, which explains the choppy, overlapping price action around current levels.

GBP/USD – What would genuinely flip the script for sterling or the dollar leg

For GBP, the cleanest bullish catalyst would be a clear attempt by the BoE to push back against early-cut pricing. That would look like speeches emphasising upside inflation risk, persistent wage pressure or a willingness to keep Bank Rate at 3.75% deeper into 2026. A run of stronger UK data — firmer wage growth, better-than-expected output and a stabilising labour market — would support that narrative and give the market cover to revisit and potentially break above the 1.3720–1.3870 band. On the USD side, a meaningful upside surprise in jobs, inflation or growth that forces the Fed to reduce or delay the currently priced two cuts in 2026 would reinvigorate the dollar bull case. In that scenario, GBP/USD would not simply drift to 1.3460; 1.3330–1.3350 and then the 1.30 region could come into view quickly if UK politics also deteriorates. Political developments form the third lever. An orderly, de-escalating profile for the Mandelson probe and a period of calm around Starmer’s leadership would allow the political risk premium in GBP to compress, supporting the currency on dips. A shift toward formal investigations, resignations or visible fractures around the fiscal framework would do the opposite and harden offers above 1.36–1.37.

GBP/USD – Stance: Sell-on-rallies below 1.3720 while BoE cuts lead Fed easing and UK risk remains elevated

Pulling the pieces together, GBP/USD sits in a 1.35–1.38 range with a clear bias to the downside. The BoE holds Bank Rate at 3.75% with a 5–4 vote that already has four members calling for 3.50%, UK unemployment is near 5.1% with around 43,000 jobs lost in the latest month, inflation is drifting lower and markets now price more easing in the UK than in the US. On top of that, political noise around Keir Starmer and Peter Mandelson is adding a visible risk premium to sterling. The dollar, for its part, is supported by the Warsh nomination and still-restrictive policy, yet capped by softer data and the prospect of roughly two Fed cuts in 2026. In that configuration, the clean tactical call is Sell-on-rallies in GBP/USD while the pair trades below 1.3720, using 1.37–1.3720 as the primary supply zone and targeting 1.3500–1.3460 on the downside. Only a sustained break above 1.3870, backed by either a BoE pushback against early cuts or a clear deterioration in US macro momentum, would justify shifting from that downside bias to a more neutral or positive stance on sterling against the dollar.

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