GBP/USD Price Forecast: Pound Stuck Around 1.3460 as Strong Dollar and UK Data Clash

GBP/USD – Strong dollar, UK data shock and risk events keep pressure near 1.34–1.35

Spot picture and short-term structure for GBP/USD

GBP/USD is trading roughly in the 1.3460–1.3485 zone after a three-week low, recovering part of the overnight dip but still clearly below the 1.35–1.36 band that acted as support earlier in the week and is now turning into resistance. The November uptrend is broken, the pair trades below the 50-day moving average around 1.3575–1.3600, and price is oscillating around the 200-day moving average, which is the key pivot into the weekend. On the 4-hour chart, the pair has slipped decisively under former support at 1.3516 and beneath the mid-January rising trendline. Price sits below both the 50-period EMA near 1.3600 and the 200-period EMA near 1.3580, with a clear pattern of lower highs and lower lows. Structurally, that shift confirms a “sell-the-rally” regime while GBP/USD remains under those moving averages.

UK macro data: retail strength versus BoE easing narrative

UK data delivered a sharp upside surprise on consumption but did not fully repair the broader policy picture. January Retail Sales rose 1.8% month-on-month versus expectations of 0.2%, after a revised 0.4% in December, and 4.5% year-on-year versus forecasts of 2.8% and a prior 1.9%. That jump explains why GBP/USD bounced off the lows toward 1.3460 after the release. However, the same week brought softer inflation and weaker labour data, keeping markets comfortable with the idea that the Bank of England can start cutting rates relatively soon, with the first move still seen as plausible around late Q1 or early Q2. Flash Composite PMI for February is projected to ease from 53.7 to 53.4, pointing to continued expansion but not acceleration. This mix—one very strong retail print against a backdrop of cooling activity and disinflation—supports sterling on the headline but does not dismantle the easing narrative. It is consistent with a currency that can bounce intraday on data but still gets sold into strength when it approaches former support zones. Domestic politics add another layer of risk. Repeated policy reversals around local elections and renewed scrutiny of Prime Minister Keir Starmer’s leadership keep a modest political risk premium in the background. That does not dominate day-to-day moves, but when risk appetite sours globally, the pound tends to underperform currencies with cleaner political backdrops.

US side: labour, Fed minutes and data risk supporting USD

On the US side the case for a firm dollar is straightforward. Initial Jobless Claims for the week ending February 14 dropped to 206,000 from a revised 229,000 and below the 225,000 consensus, signalling a labour market that remains tight and does not justify aggressive rate cuts. The latest Federal Reserve minutes show a clear majority of officials in no hurry to lower rates while inflation is still above the 2% target, with only a small minority starting to discuss cuts. That stance keeps the front end of the US curve supported and underpins demand for dollars. The US Dollar Index is holding around 97.90–98.00, near a four-week high, after reclaiming the 0.618 Fibonacci retracement at 97.61 on the 4-hour chart. The 50-period EMA around 97.20 is acting as support, the 200-period EMA near 98.47 is the next resistance, and the RSI near 60 reflects solid bullish momentum. As long as DXY stays above roughly 97.60, dips are more likely to be bought than extended. The next catalysts are the preliminary Q4 GDP print, the core PCE deflator and the flash PMIs. A firm GDP number and sticky PCE would validate the current “higher-for-longer” stance and could push the index through 98.08 toward 98.47, which would be a direct headwind for GBP/USD. A genuine downside surprise in growth or inflation would reopen the rate-cut debate and could knock DXY back toward 97.20, offering some relief to sterling.

Tariffs, Iran and the risk-premium channel for GBP/USD

Macro risk is not just data; it also comes from legal and geopolitical shocks. The US Supreme Court decision striking down emergency global tariffs has already triggered swings in the dollar and US indices. If markets start to focus on the possibility of large tariff refunds and the associated fiscal implications, longer-dated US yields could move higher while the dollar briefly softens on concerns about the fiscal path. For GBP/USD, that mix is two-sided: higher yields support the greenback, but a perceived deterioration in the fiscal profile can limit the dollar’s appeal over a longer horizon. In the near term, however, the surprise nature of the ruling has tended to push the dollar lower and boost risk assets on headline flow, providing room for corrective bounces in pairs like GBP/USD. At the same time, Iran risk sits over the market. Donald Trump has put roughly a 10-day window on negotiations before promising “really bad things” if no deal is reached. Oil is already responding, with Brent around the low 70s dollars per barrel and WTI in the mid-60s, delivering the first weekly gain since January. The core risk is the Strait of Hormuz. Roughly a third of global seaborne crude flows through the strait and any credible threat of disruption could send crude pricing into the 80–100 dollar region in a severe scenario. That would hit global risk sentiment, squeeze European growth more than US growth, and typically favour the dollar as a defensive currency. In that case GBP/USD would likely be pressured lower, because the UK remains more vulnerable to imported energy price swings than the US, which behaves increasingly like an energy superpower.

Technical map: moving averages, momentum and key levels

From a pure chart perspective GBP/USD now trades with a clear downside tilt. On the daily chart, spot around 1.3460–1.3470 sits below the broken November uptrend and below the 50-day EMA in the 1.3575–1.3600 zone, while hugging the 200-day average. A daily close cleanly beneath the 200-day would turn that band into resistance and confirm a more extended down-leg. The 14-day RSI near 41 is below the 50 midline but far from oversold, leaving room for further downside before momentum exhausts. The MACD has rolled into negative territory after crossing below its signal line, aligning with the idea that a fresh bearish phase has started rather than finishing. On the 4-hour chart the loss of 1.3516 is critical. Once that level broke, the pair slid toward 1.3470 and has since consolidated below the 50-period EMA around 1.3600 and the 200-period EMA near 1.3580. Lower highs and lower lows across recent sessions reinforce the trend. Immediate supports sit near 1.3435 and then 1.3391–1.3390; below these, 1.3371, 1.3300 and 1.3250 come into view as staggered medium-term downside levels. On the topside, 1.3508 and 1.3516 form the first resistance pocket. Above that, the heavier resistance is the moving-average cluster around 1.3575–1.3600. As long as GBP/USD remains below that band, the technical bias stays negative and rallies into those zones are more likely to fail.

EUR/USD context and what it implies for GBP/USD

The broader European FX backdrop matters because sterling rarely decouples from the euro when the driver is global macro rather than idiosyncratic news. EUR/USD is trading around 1.1760 after slipping below support at 1.1806–1.1768 and remains locked inside a descending triangle on the daily chart. The 50-day EMA is rolling over around 1.1850, the 200-day EMA near 1.1800 has flipped into resistance, and next supports lie near 1.1742 and then 1.1684–1.1672. The RSI is just below 50 and the MACD has turned lower, consistent with mounting downside risk but not yet capitulation. A decisive break lower in EUR/USD would confirm broad pressure on European currencies against the dollar rather than a sterling-specific story. In that environment, GBP/USD is unlikely to outperform and would more likely track the dollar strength, potentially underperforming if UK politics and BoE easing expectations weigh more heavily than ECB expectations.

Scenario map for GBP/USD over the next sessions

Short-term outcomes for GBP/USD revolve around how data and risk events land against this technical setup. In a scenario where US GDP is firm, core PCE stays sticky and PMIs hold up, while Iran risk and oil prices stay elevated and tariff fallout does not meaningfully weaken the dollar, the US Dollar Index can extend above 98.08 toward 98.47. Under that configuration, rebounds in GBP/USD toward 1.3508–1.3516 and into 1.3575–1.3600 are likely to be capped, and a move through 1.3435 toward 1.3390–1.3370 becomes the base case. If instead US data soften, with weaker GDP or cooler PCE, while UK PMIs remain resilient and investors treat the 1.8% monthly and 4.5% annual retail sales figures as the start of a stronger consumption run rather than a one-off, the dollar can slide back toward 97.20 on the index and GBP/USD can re-test the 1.3508–1.3516 area and potentially the moving-average cluster near 1.36. Even then, the 1.3575–1.3600 region acts as the key decision point; without a daily close above that band the bearish phase is merely correcting, not ending. Shock events can override these nuances. A rapid escalation in the Gulf, sending Brent significantly higher and triggering risk aversion, would almost certainly weigh on GBP/USD and favour the dollar. Conversely, if markets refocus on tariff refunds, fiscal uncertainty and a softer official stance on the dollar, a sharp pullback in the greenback could drive a squeeze higher in the pair.

Directional stance on GBP/USD – bias and preferred approach

Bringing the macro, risk and technicals together, the balance around 1.3460–1.3480 favours a negative bias on GBP/USD rather than a neutral or positive one. The dollar is supported by weekly claims at 206,000, a Federal Reserve that is not rushing to cut, and an index holding above 98.00 with rising short-term trend support. Sterling, despite the 1.8% monthly and 4.5% annual pop in retail sales, still trades against a central bank that markets expect to loosen within months, under a political backdrop that adds noise, and with charts that have just broken a multi-month uptrend and lost the 50-day average. The technical map shows clear support steps lower and resistance clustered overhead. In that environment, the cleaner professional stance is to treat GBP/USD as a bearish market while it remains below roughly 1.3575–1.3600, with preference for selling strength into the 1.3508–1.3516 and 1.3575–1.3600 bands rather than chasing dips. Only a sustained recovery through the 1.36 region, backed by improving momentum signals, would justify shifting that stance toward a more neutral “wait and see” view.

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