• The Pound Sterling tussled with the 200-day EMA and fell as Fed hawkishness collides with Bank of England uncertainty.
• The Fed held rates and raised its 2026 core inflation forecast to 2.7%; Chair Powell said progress on inflation has been slower than hoped.
• The BoE announces its rate decision on Thursday, with markets now expecting a hold after the Middle East oil shock reshaped the inflation outlook.

GBP/USD fell around 0.7% on Wednesday, sliding below the 1.3300 handle as Cable continues to grapple with the technical level. The sell-off extends the pullback from the late-January high near 1.3870, with the pair now trading below both of its key daily moving averages. Wednesday's decisive bearish candle suggests the indecisive price action of the past two weeks has resolved to the downside.

The Federal Reserve (Fed) held rates at 3.50% to 3.75% and stuck with its projection of one cut in 2026, but Chair Jerome Powell's press conference pushed the US Dollar higher across the board. Powell noted that inflation progress has been slower than the central bank had hoped, while the updated Summary of Economic Projections raised the 2026 core inflation forecast to 2.7% from 2.5% in December. Wednesday's Producer Price Index (PPI) reinforced the hawkish tone, with headline PPI jumping 0.7% month-on-month (MoM) against a 0.3% consensus.

All eyes now turn to the Bank of England's (BoE) rate decision on Thursday. Markets had been pricing a roughly even chance of a cut heading into March, but the Middle East oil shock has all but ruled that out; the consensus expectation is now a hold at 3.75%. The February vote was a narrow 5-4 to hold, and the split this time will be closely watched for signs of how the Committee is weighing the UK's worsening growth picture against the renewed inflation threat. UK unemployment has risen to a five-year high of 5.2%, yet services inflation printed 4.4% in January, well above the BoE's forecast. Governor Andrew Bailey has described the March decision as a "genuinely open question," but rising energy costs have significantly narrowed the window for easing.

Technical Analysis

In the daily chart, GBP/USD trades at 1.3265. The near-term bias is mildly bearish as spot holds below the declining 50-day EMA around 1.35 while still hovering close to the flatter 200-day EMA near 1.34, signaling a fading medium-term uptrend and growing downside pressure. The recent sequence of lower daily closes from the mid-1.36s into the low-1.33s confirms sellers’ control, with rallies capped before challenging the 50-day average. The Stochastic has rolled over from mid-range and is sliding toward oversold territory, indicating momentum remains aligned with the downside but without the exhaustion typical of a completed sell-off.

Immediate resistance emerges at the 1.3350 area, near the latest cluster of failed bounces and just beneath the 200-day EMA, with a break above this region needed to ease downside pressure and open the way toward 1.3450, followed by the stronger barrier at 1.3500 around the 50-day EMA. On the downside, initial support aligns with the recent low near 1.3220, guarding the path toward 1.3150 as the next bearish objective if momentum persists. A daily close below 1.3220 would confirm continuation of the short-term downtrend, while holding above it would keep price trapped in a broader consolidation around the longer-term average.

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