• GBP/USD drops 0.21% to 1.3320 as US PPI beats expectations across headline and core.
• DXY climbs to 99.76 amid reduced Fed rate cut bets and geopolitical risks.
• Markets await Fed and BoE decisions, with focus on dot-plot and policy outlook.

The GBP/USD fell 0.21% on Wednesday following the release of a hot US inflation report, prompting investors to cut their dovish bets on the Federal Reserve. At the time of writing, the pair trades at around 1.3320.

Stronger inflation data and Middle East tensions boost the Dollar, weighing on Sterling

An escalation of the Middle East conflict soured market mood, a tailwind for the haven appeal of the US Dollar. Israel's attack on Iran's gas facilities prompted a reaction by Tehran, which said that they will strike the enemy's infrastructure, according to Al-Jazeera.

The US Dollar Index (DXY), which tracks the Greenback's performance against six currencies, edges up 0.20% to 99.76 after the US Bureau of Labour Statistics (BLS) revealed that producer-side inflation rose sharply in both headline and core figures.

The Producer Price Index (PPI) in February expanded to 3.4% YoY, exceeding estimates and January's 2.9% reading. Core PPI, which excludes volatile items, jumped from 3.6% to 3.9% YoY for the same period.

Ahead, traders eye the Federal Reserve's decision. Powell and Co. are expected to hold rates unchanged while releasing their economic projections for the full year. Money markets would be eyeing the "dot-plot," in which Fed officials express their expectations for the path of interest rates.

After the release of the monetary policy statement, market participants' focus would shift to Fed Chair Jerome Powell's press conference.

Following Powell's press conference, attention would turn to the Bank of England (BoE), which would also announce its monetary policy decision on March 19. Traders expect the BoE to keep the Bank Rate at 3.75%, with the first move towards a rate hike expected in March 2027, driven by high energy prices sparked by the Middle East conflict.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3320. The pair holds a mildly bearish near-term bias as spot slips back below the clustered simple moving averages around 1.3510–1.3520, confirming a loss of upward momentum seen after repeated failures near the descending resistance trend line from 1.3869. The recent pivot lower from the 1.36 area reinforces the significance of that downward-sloping line, which continues to cap bounces and guide price action lower. The FXS Fed Sentiment Index has stabilized after prior weakness, offering little immediate support for the pound and leaving price action driven primarily by the technical squeeze between the broken moving-average band above and the prior rising support base below.

Initial resistance emerges at the 1.3355–1.3360 region, where recent highs converge with the latest rejection from the descending trend line, followed by stronger resistance at 1.3450 and then near 1.3530, around the upper moving-average cluster. A daily close above that band would be needed to neutralize the bearish tone and re-open the 1.36 handle. On the downside, immediate support is located at 1.3300, ahead of the 1.3220 zone, which aligns with prior lows and the lower portion of the former rising trend structure from 1.3035. A break below 1.3220 would expose the 1.3100 area, where the broader uptrend from the start of the move began to build a base.

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