1.3400 Area: GBP/USD Price Forecast Retains Bullish Bias Ahead of Wednesday’s BoE Decision

Hopes of diplomacy over Iran weigh on the safe-haven USD, lifting GBP/USD slightly on Monday.
Ahead of the key BoE decision, rate hike expectations provide additional backing for the GBP and spot prices.
Technical conditions remain constructive, pointing to an easier path higher than lower.

GBP/USD returns to 1.3400. Dip-buying at the start of the week lifts the pair during the Asian session, halting a modest retreat from Friday’s peak, its highest since 16 September.

Prospects of a diplomatic breakthrough that could end the US-Iran war are weighing on the safe-haven US Dollar (USD). By contrast, expectations that the Bank of England (BoE) will tighten monetary policy continue to underpin the British Pound (GBP). These forces favour gains in GBP/USD. Buyers nevertheless appear reluctant to take aggressive positions before this week’s key central bank decision and major US economic releases.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

A 25 basis point (bps) interest rate increase is widely anticipated when the BoE delivers its policy decision on Wednesday. On the US calendar, the ISM Manufacturing PMI is due later today. The ISM Services PMI follows on Wednesday, ahead of Friday’s crucial Nonfarm Payrolls (NFP) report. Developments in the Middle East crisis could also move the USD and give GBP/USD fresh impetus.

Trading above the 100-day Simple Moving Average (SMA) at 1.3387 leaves spot prices with a modest bullish bias as they test a cluster of Fibonacci resistance immediately overhead. Momentum signals reinforce that outlook: the Relative Strength Index (RSI) is around 57, while the Moving Average Convergence Divergence (MACD) indicator remains positive and constructive above zero. Together, these readings support the prospect of further GBP/USD gains.

At 1.3407, the 50.0% retracement provides the first resistance. If buyers sustain the advance, the next upside targets are the 61.8% level at 1.3471 and the 78.6% retracement at 1.3561. Initial support lies at the 100-day SMA at 1.3387, ahead of the 38.2% Fibonacci retracement at 1.3344. A steeper decline would bring the 23.6% level at 1.3265 into view, followed by the structural Fibonacci anchor near 1.3138.

A decisive daily close above 1.3407 is required to open the way for a stronger rise towards 1.3471 and 1.3561. Until then, the near-term outlook would remain positive provided GBP/USD stays above the 100-day SMA and the retracement support levels beneath it.

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

GBP/USD: daily price chart

Economic release

BoE interest rate announcement

At the conclusion of each of its eight scheduled meetings per year, the Bank of England (BoE) announces its interest rate decision. A rate increase coupled with a hawkish assessment of the economy’s inflation outlook is usually positive for Pound Sterling (GBP). Conversely, a dovish assessment of the UK economy, accompanied by unchanged or lower interest rates, is generally viewed as negative for GBP.

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Data source: Bank of England