GBP/USD Price Forecast: Seems vulnerable near mid-1.3500s; UK CPI/FOMC Minutes awaited

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GBP/USD remains on the back foot for the third straight day amid a modest USD strength.
Traders look to the UK consumer inflation figures and FOMC Minutes for a fresh impetus.
A convincing break and acceptance below the 200-period SMA on H4 favors bearish traders.

The GBP/USD pair struggles to capitalize on the previous day's late rebound from an over one-week low – levels below the 1.3500 psychological mark – and trades with a negative bias for the third consecutive day on Wednesday. The downside, however, remains cushioned as investors seem reluctant to place aggressive directional bets ahead of the release of the latest UK consumer inflation figures and FOMC Minutes.

In the meantime, Tuesday's disappointing UK jobs report reaffirmed bets for a rate cut by the Bank of England (BoE) in March and continues to undermine the British Pound (GBP). Apart from this, a modest US Dollar (USD) uptick acts as a headwind for the GBP/USD pair during the Asian session. However, dovish Federal Reserve (Fed) expectations might cap gains for the USD and limit losses for the currency pair.

The overnight breakdown below the 200-period Simple Moving Average (SMA) on the 4-hour chart was seen as a key trigger for the GBP/USD bears. The Moving Average Convergence Divergence (MACD) shows the histogram in negative territory but contracting, indicating the MACD line below the Signal line, and both hovering around the zero line. The Relative Strength Index (RSI) sits at 39 (bearish), recovering from oversold.

Meanwhile, the 200-period SMA trends gently higher, but the GBP/USD pair remains capped near this dynamic barrier. The near-term bias stays heavy while spot prices hold below the SMA. That said, the momentum would improve on a move above the said resistance, whereas a rejection there could keep sellers pressing the downside.

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

GBP/USD 4-hour chart

Economic Indicator

Core Consumer Price Index (YoY)

The United Kingdom (UK) Core Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. The YoY reading compares prices in the reference month to a year earlier. Core CPI excludes the volatile components of food, energy, alcohol and tobacco. The Core CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

Why it matters to traders?

The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.

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