1.3450 in Focus: GBP/USD Price Forecast Remains Positive Above 100-day SMA as Gains Hold

1.3445 is the level GBP/USD is holding near as it trades higher in early European dealing on Tuesday.
Above the 100-day SMA, the pair retains a positive bias, supported by bullish RSI momentum.
1.3500 marks the nearest resistance, while 1.3400 provides the first support to monitor.

1.3445 is where GBP/USD is trading, with gains in Tuesday’s early European session. Caution may nevertheless emerge later in the day as markets await the US October Consumer Price Index (CPI) inflation report.

A 25 basis points (bps) increase last week took the BoE’s benchmark interest rate to 4.00%. It was the bank’s first rise in over three years. The UK central bank cautioned that a continuation of the US-Iran conflict would likely require at least one further increase.

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

Andrew Goodwin, chief UK economist at Oxford Economics, said: "December's meeting now looks like a coin flip, with the path of oil and natural gas prices set to be the decisive factor,"

Nearly an 84% probability of a Federal Reserve (Fed) rate increase next month is now priced into markets as traders step up bets on further US monetary tightening. Friday’s strong US October jobs report could help contain losses in the US Dollar (USD).

4.00% BoE rate aligns with Fed ceiling; MPC signals risk-dependent tightening

ABN Amro analysts describe a firmly hawkish BoE decision, noting that the bank “raised the bank rate by 25 bps to 4.00%, matching the upper bound of the 3.75-4.00% Fed Funds Rate range.” Support for the move came from “eight members” of the MPC, while “one preferred a 50-bps increase.” The committee also “projected inflation to reach around 5% by mid-2027 and signalled another increase unless the Middle East conflict is resolved,” ABN Amro says. UK policy rates may now match the ceiling of the current US range, but the committee retains a conditional bias towards further tightening.

2026 rate cuts remain possible as BoE’s Pill highlights uncertain outlook

At 4.2/10, the FXS Speechtracker score for Pill’s latest comments is well below the historical average of 6.4/10. That reading points to a more cautious, less assertive policy position. His emphasis that “nothing is baked in” for next year, alongside “no preset upward path” for interest rates from spring, represents a dovish move away from assumptions that tightening will continue.

Downside risks for the Pound are reinforced by the acknowledgement that Bank Rate could remain unchanged or even decline if growth stalls next year. Those risks are particularly relevant if UK data lag those of its peers. The focus on squeezed margins and companies’ responses reflects concerns about growth and profitability. It also supports the view that the BoE may favour economic resilience over additional rate rises, an outcome usually unfavourable for GBP against other major currencies, including the Dollar and Euro.

Technical outlook: 100-day SMA underpins positive GBP/USD bias

Trading above both the 100-day simple moving average (SMA) and the Bollinger middle band, GBP/USD retains a modest bullish bias on the daily chart. These levels continue to support the recent advance. The price is approaching the upper Bollinger band, the nearest resistance on the upside. Meanwhile, a strengthening Relative Strength Index (RSI) near 57 points to positive upward momentum without yet signalling overbought conditions.

Around 1.3500, the upper Bollinger band presents the first resistance hurdle. A sustained move through it would bring the 9 September high of 1.3568 into view, followed by the 21 August high of 1.3675.

Immediate support lies at the 100-day SMA of 1.3400. Further selling beneath that level could put the Bollinger mid-line near 1.3370 in focus. Beyond that are the 28 October low of 1.3272 and the lower Bollinger band at 1.3235.

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

Pound Sterling: key questions

What defines the Pound Sterling?

Dating back to 886 AD, the Pound Sterling (GBP) is the world’s oldest currency and serves as the United Kingdom’s official currency. According to 2022 data, it ranks fourth globally by foreign exchange (FX) trading activity, representing 12% of all transactions and an average daily volume of $630 billion. Among its main trading pairs, GBP/USD, known as ‘Cable’, accounts for 11% of FX activity. GBP/JPY, which traders call the ‘Dragon’, represents 3%, while EUR/GBP accounts for 2%. The Bank of England (BoE) issues the Pound Sterling.

Why do Bank of England decisions matter for Sterling?

Monetary policy set by the Bank of England has the greatest influence on the Pound Sterling’s value. Policy decisions depend on whether the BoE has met its central objective of “price stability”, meaning a steady inflation rate of around 2%. Interest-rate adjustments are its main means of pursuing that goal. To curb excessive inflation, the BoE raises interest rates, increasing borrowing costs for households and businesses. Higher rates generally support GBP by making the UK a more appealing destination for international investors’ funds. Conversely, very low inflation signals slowing economic growth. The BoE would then consider cutting rates to reduce credit costs, encouraging businesses to borrow more and invest in projects that generate growth.

Which economic releases affect the Pound’s value?

By measuring economic health, data releases can move the Pound Sterling. GDP, Manufacturing and Services PMIs, and employment figures are among the indicators that can shape GBP’s direction. Sterling benefits from a robust economy, which draws in foreign investment and may also prompt the BoE to raise interest rates, directly strengthening GBP. Weak economic figures, by contrast, are likely to weigh on the Pound Sterling.

Why is the Trade Balance important for Sterling?

The Trade Balance is another important release for the Pound Sterling. Over a specified period, it tracks the difference between a country’s export earnings and its expenditure on imports. Strong overseas demand for a country’s exports creates additional demand for its currency as foreign buyers seek to purchase those products. A positive net Trade Balance therefore supports the currency, while a negative balance has the opposite effect.