GBP/USD rises above 1.3400 again as it navigates an uncertain consolidation phase

GBP/USD Approaches 1.3450 Amid Ongoing Consolidation

The GBP/USD currency pair advanced by approximately 0.3% on Monday, nearly reclaiming the 1.3450 level after rebounding from an early-session low near 1.3280. This marks the sixth straight session where the pair has hovered around the 200-day Exponential Moving Average (EMA), with prices consolidating close to 1.3400. Despite signs of consolidation, a bullish close above 1.3400 has shifted short-term momentum in favor of buyers as the market heads into Tuesday.

Bank of England Rate Cut Odds Diminish

Expectations for a rate cut by the Bank of England (BoE) have plummeted since tensions escalated in the Strait of Hormuz. Market participants now see less than a 20% chance of a rate reduction this month, a sharp decline from over 80% prior to the conflict. Futures pricing suggests fewer than one 25 basis point cut for the remainder of 2026, as rising energy prices are expected to keep inflation pressures elevated in the UK.

Key Economic Events This Week

• Wednesday: The US February Consumer Price Index (CPI) takes center stage, with forecasts pointing to a 0.3% month-over-month rise and a 2.4% increase year-over-year.
• Thursday: The UK releases January industrial production figures, and BoE Governor Andrew Bailey is scheduled to deliver a speech.
• Friday: The week concludes with the UK’s January Gross Domestic Product (GDP) and manufacturing output, both expected to show 0.2% monthly growth. In the US, data releases include January’s core Personal Consumption Expenditures Price Index (PCE) at 0.4% MoM and 3% YoY, a preliminary fourth-quarter GDP reading at 1.4% annualized, and the University of Michigan’s March consumer sentiment index at 55.

GBP/USD Daily Chart Overview

Technical Perspective

Currently, GBP/USD is trading at 1.3431. The short-term outlook is slightly bearish, as the pair remains below the declining 50-day EMA but above the more stable 200-day EMA, indicating a corrective move within a broader base. The price has formed a pattern of lower highs since the 1.38 region, and the recent failure to reclaim the 1.35 mark highlights ongoing selling pressure during rallies. The stochastic oscillator has bounced from oversold levels but stays in the lower half of its range, suggesting that upward moves may encounter resistance and are unlikely to trigger a sustained reversal at this stage.

Resistance is initially found near 1.3490, where recent swing highs align with the 50-day EMA, forming a significant barrier. A daily close above this level could relieve immediate downside risks and pave the way toward 1.3550 and potentially 1.3680. On the downside, support is seen at 1.3400, protecting the recent low around 1.3360, an area that previously attracted buyers on dips. Should the price fall below 1.3360, the next key level is the 200-day EMA near 1.3375. Persistent weakness below this moving average would reinforce the bearish outlook and could prompt a deeper decline toward the 1.3300 zone.

(This technical analysis was prepared with assistance from an AI tool.)