GBP/USD Price Forecast - Pound Stuck at 1.36 as Fed Cut Hopes Clash With UK Weakness

GBP/USD – Sideways near 1.36 as dollar support and UK stagnation cap upside

GBP/USD – Current price zone, channel structure and key bands

GBP/USD is trading around 1.3620, almost unchanged on the day and only about 0.12% higher on the week after fading from highs above 1.3700. Price sits right on the lower edge of a rising channel drawn from the November–January advance, with a tight support band at 1.3620–1.3600. Below that, the next layers are 1.3570–1.3585 from recent intraday pivots, 1.3540 as the 38.2% retracement of the prior leg higher, and the heavier 1.3500–1.3510 base where the late-January low around 1.3507 aligns with the 55-day EMA near 1.3509. On the upside, 1.3650 is the first meaningful break level, followed by 1.3700, the 1.3710–1.3725 band, and then 1.3732–1.3733 where recent swing highs converge. Above 1.3732, the path re-opens toward 1.3867 and, on a larger horizon, toward the 1.4248–1.4284 resistance area tied to the 2021 peak and the long-term 38.2% retracement from 2.1161 to 1.0351. As long as GBP/USD holds above 1.3008, the broad move from 1.0351 is still treated as an ongoing bullish phase rather than a completed rebound.

GBP/USD – US CPI at 2.4%, yield reaction and what it means for the dollar leg

The latest US inflation numbers were just soft enough to shift rate expectations but not weak enough to break the dollar. Headline CPI slowed from 2.7% to 2.4% year-on-year, below the 2.5% consensus, while core CPI eased from 2.6% to 2.5%. That combination drove US 2-year yields down toward roughly 3.40% and 10-year yields toward 4.05%, as markets moved to price a higher probability of a first Fed cut around June. At the same time, the USD has not sold off aggressively: the dollar index is still trading close to recent highs because the market assumes Jerome Powell will stress independence and avoid signalling a rapid easing cycle. For GBP/USD, that means lower yields remove some support for the dollar but do not generate a free-fall. The pair gets enough room to hold above the 1.3600 floor, yet struggles to build a clean rally through 1.37–1.38 without a much clearer dovish pivot from the Fed.

GBP/USD – UK macro mix: 3.1% inflation, 0.5% growth and a BoE trapped in an awkward corner

On the UK side, the macro profile remains weak. Inflation is still around 3.1%, clearly above the Bank of England’s 2% target, while 2025 GDP growth came in near 0.5%, signalling a flat economy running on high rates. That forces the BoE to keep policy tight longer than ideal, even though domestic demand is fragile. Compared with the US – which just reported a 215,000 increase in January non-farm payrolls on top of earlier resilient data – the UK offers weaker growth with still-sticky prices. That mix does not justify a major re-rating of the pound. As long as the BoE is constrained between slow growth and persistent inflation, GBP/USD rallies tend to stall in the mid-1.37s unless the Fed softens much faster than expected or UK data show a clear upside surprise in activity or disinflation.

GBP/USD – Momentum, RSI and why price looks more like a range than a trend

Momentum indicators confirm the range narrative. On the daily chart, GBP/USD is still moving inside an ascending channel, but price is hugging the lower boundary rather than pushing toward the top. The 14-day RSI has cooled back to roughly 51 after earlier overbought readings, signalling neutral momentum rather than a directional impulse. Daily stochastics are slipping and a bearish Tension Indicator points to weakening price action, yet intraday measures are already rebounding from oversold levels around 1.3600. That mix – neutral RSI, soft but stabilising intraday momentum and a well-defined structural floor – fits a pattern where the pair oscillates between support and resistance instead of trending. Sellers have difficulty forcing a clean break below 1.36 without a fresh macro catalyst, while buyers hesitate to chase above 1.37–1.3730 in the absence of a strong policy or data shift.

GBP/USD – Downside map: 1.3600, 1.3540, 1.3500/10 and what a break would signal

The downside path is built on a series of clear technical levels. The first line is the 1.3620–1.3600 band, which combines recent congestion with the channel base. A daily close under 1.3600 would expose 1.3570–1.3585 as the next target zone. If that gives way, focus shifts to 1.3540, the 38.2% retracement of the November–January advance. The more strategic cluster sits at 1.3500–1.3510, where the late-January low at 1.3507 and the 55-day EMA at 1.3509 sit almost on top of each other alongside prior congestion. A sustained break and close below 1.3500/10 would mark a change of character: it would confirm that the current pullback is no longer a shallow pause in an uptrend but a deeper correction aimed at 1.3440–1.3450 (the 50% retracement zone) and potentially 1.3342 if downside momentum accelerates. Until that 1.3500/10 area collapses, the larger bullish move from 1.0351 remains technically valid, even if price spends time chopping sideways.

GBP/USD – Upside map: 1.3650, 1.3700, 1.3732, 1.3867 and the 1.4248–1.4284 cap

The topside is equally structured. The first hurdle is 1.3650, an important intraday and daily break level. A convincing daily close above 1.3650 would show that buyers have regained enough control to pull the pair away from the channel base. The next zone is 1.3700 plus the 1.3710–1.3725 cluster, where shorter-term moving averages and recent highs line up. A break through that band, followed by sustained trade above 1.3732–1.3733, would strongly suggest that the pullback from 1.3867 ended at 1.3507 and that the market is ready to retest 1.3867. A clean breach of 1.3867 would then turn focus back to the long-term 1.4248–1.4284 cap, which marks both the 2021 high and the 38.2% retracement of the long slide from 2.1161. As long as price trades below that 1.4248–1.4284 zone, the multi-year downtrend from 2007 is not fully reversed, and long-horizon players will still treat the rally from 1.0351 as a corrective structure, even if the medium-term bias stays constructive.

GBP/USD – 2025 as a warning: how sticky US inflation turned 1.3600 into a bull trap

The experience from 2025 is a clear reminder that the USD leg can reassert itself quickly if inflation refuses to behave. In early 2025, GBP/USD was also stabilising around 1.3600 with consensus calling for US inflation to ease toward 2.5% and a narrative of imminent Fed cuts. Instead, core US inflation averaged about 3.9% in the second half of the year, forcing the Fed to abandon cut plans and stick to a hawkish stance. The result was a stronger-for-longer dollar theme that smashed the 1.3600 floor, broke the ascending channel that many traders were relying on, and pushed the pair significantly lower over the following months. Today, the headline and core numbers have indeed dropped to 2.4%–2.5%, but the risk structure is similar: if the current relief proves temporary and price pressures re-accelerate, June cut expectations will be rolled back and GBP/USD will face renewed downside. That is why the 1.3600 zone cannot be treated as a guaranteed long entry, even though it is holding for now.

GBP/USD – Why politics in London barely moves the needle while fundamentals dominate

Recent UK political turbulence has had almost no sustained impact on GBP/USD. Price has largely shrugged off headlines out of Westminster, which shows that global markets are focused on yields, growth, and risk sentiment rather than daily domestic drama. The real constraint for the pound is structural: sub-1% growth, inflation still above target, and limited room for the BoE to surprise in a hawkish direction. In that framework, the currency struggles to generate a premium over the USD. The US, despite a softer CPI print, still combines 2.4%–2.5% inflation with solid job creation and higher policy rates. That yield and growth mix supports the dollar and explains why every attempt by GBP/USD to push decisively through 1.37–1.38 meets supply. Without a clear improvement in UK data or a definitive pivot from the Fed, the pound is more likely to oscillate against the dollar than to re-price into a sustained up-leg.

GBP/USD – Tactical stance: hold the range with a mild downside bias inside 1.35–1.37

Taking the technical bands and macro inputs together, GBP/USD is boxed into a relatively clean range. Spot trades near 1.3620 with a tight floor at 1.3600–1.3570 and a stronger base at 1.3500–1.3510, while the ceiling runs from 1.3650 through 1.3700 to 1.3732 and then 1.3867. US inflation has eased to 2.4%–2.5%, but the Fed still has room to stay patient, and US yields, although lower, remain attractive relative to the UK. The UK economy is flat, inflation is still above the BoE’s target, and the rate path offers little room for positive surprises. That mix points to a hold stance with a slight bearish tilt: the structure is not weak enough to justify an aggressive short below 1.36 while 1.3500/10 holds, but rallies into the 1.3700–1.3730 band look vulnerable unless new data or Fed communication clearly shift the balance. Until price either closes decisively above 1.3867 or breaks and holds below 1.3500/10, GBP/USD is best treated as a range trade with downside risk if the US inflation and yield story turns less friendly than the latest CPI snapshot suggests.

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