• GBP/USD rallies as Andrew Bailey signals scope for further easing at the Bank of England.
• Firmer DXY and upbeat US confidence data underpin the Dollar despite tariff uncertainty.
• Political pressure on Keir Starmer caps Sterling upside ahead of local elections.

The Pound Sterling (GBP) trades higher on Tuesday even though the Bank of England (BoE) Governor opened the door for further easing, amid uncertainty over US trade policies. At the time of writing, GBP/USD exchanges hands near the 1.3530 figure, up 0.30%

Sterling resumes uptrend despite BoE signaling potential cuts

Market mood has improved, yet fears of AI disruption keep software stocks pressured as the Anthropic AI model can modernize software that runs in most ATMs worldwide, powered by IBM. In the FX space, the US Dollar (USD) bounced off weekly lows, turning positive according to the US Dollar Index (DXY).

The DXY, which measures the performance of six currencies versus the American Dollar, is up 0.16% at 97.85.

Data in the US revealed that American households are becoming optimistic about the labor market, which showed signs of stabilizing, and inflation has tempered somewhat, according to the Conference Board (CB). The CB Consumer Confidence rose from an upwardly revised 89 print last month to 91.2 in February.

Central bank speaking dominates the headlines

Chicago Fed President Austan Goolsbee was hawkish, saying that he supports keeping rates steady as he noted that a 3% inflation rate “is not good enough — and it’s not what we promised when the Federal Reserve committed to the 2% target.”

Raphael Bostic of the Atlanta Fed said that they would need to keep focus on inflation

Across the pond, Bank of England Governor Andrew Bailey commented that at the March meeting, the question is whether a cut is justified. He said that he sees some weakness in the labor market and revealed in the annual report that "with inflation returning to target, there should be scope for some further easing in monetary policy.”

US Dollar driven by tariffs, Sterling by politics

On Tuesday, the US enacted 10% global tariffs under Section 122, as revealed in the US Customs notice. Nevertheless, the Trump administration said that duties will be set at 15% for 150 days.

In the UK, the pressure on Prime Minister Keir Starmer remains high as his Labour Party faces elections in Manchester’s Gorton and Denton constituency on Thursday. A bad outcome could increase the calls from within Starmer’s party seeking to oust him from the PM job. In that outcome, GBP/USD could see further downside due to political instability in the short term.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3521. The near-term bias is neutral with a slight bullish tilt as price holds above the rising support trend line that originated near 1.3035 and continues to attract buyers on shallow pullbacks. Spot also trades above the clustered simple moving averages around 1.3500, which now track below the price and reinforce the notion of an underlying uptrend despite the recent consolidation under the descending resistance line from 1.3869. The repeated failure to extend losses below the mid-1.3400 area keeps downside momentum contained, while the series of higher supported closes along the ascending line suggests dip demand remains active.

Initial resistance is the descending trend-line barrier now intersecting just above 1.3500, with a sustained break opening the way toward the recent swing area around 1.3700 and then the 1.3800 zone. On the downside, immediate support is seen near 1.3450, in line with recent reaction lows, followed by the rising trend-line support and the 100–200-day moving average cluster around 1.3400. A daily close below that 1.3400 region would weaken the bullish bias and expose deeper retracements toward 1.3300, while holding above it keeps the focus on an eventual topside break of the downtrend cap.

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