GBP/USD Price Forecast: Declines below 1.3350 as bearish momentum builds amid stronger USD

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The GBP/USD pair holds losses near 1.3335 during the Asian trading hours on Monday, pressured by a stronger US Dollar (USD). Escalating conflict in the Middle East pushed Brent crude oil prices above $100 per barrel.

GBP/USD declines to around 1.3335 in Monday’s early Asian session.
The path of least resistance is to the downside as the RSI momentum holds below the midline.
The initial support level to watch is 1.3230; the first upside barrier emerges at 1.3430.

The Bank of England (BoE) kept interest rates steady at 3.75% at its March meeting last week, as widely expected. BoE Governor Andrew Bailey said that the Middle East conflict will cause a "shock to the economy" that will push up inflation in the near term, adding that restoring safe shipping through the Strait of Hormuz is key to addressing energy price rises.

Technical Analysis:

In the daily chart, the near-term bias of GBP/USD is mildly bearish as spot holds below the flattening 100-day exponential moving average and trades beneath the Bollinger middle band, keeping price action anchored in the lower half of the volatility envelope. RSI around 45 reinforces a loss of bullish momentum rather than outright selling pressure, suggesting sellers retain an edge while dips show measured, not impulsive, downside.

Immediate support emerges at the recent low near 1.3230, where the lower Bollinger Band previously tracked, and a break below this area would expose the next downside level around 1.3160. On the topside, initial resistance sits at 1.3430, aligning with the Bollinger middle band cluster and the 100-day EMA, with a daily close above this cap needed to neutralize the bearish tone and open the way toward 1.3560.

(The technical analysis of this story was written with the help of an AI tool.)

Pound Sterling FAQs

What is the Pound Sterling?

The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).

How do the decisions of the Bank of England impact on the Pound Sterling?

The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.

How does economic data influence the value of the Pound?

Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.

How does the Trade Balance impact the Pound?

Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

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