GBP/USD Price Forecast - Pound Stalls Near 1.3530 as BoE Cut Bets Clash With Tariff-Weakened Dollar

GBP/USD: 1.35 Compression Point Between BoE Cut Risk And Tariff-Damaged Dollar

GBP/USD Price Action Around 1.3530–1.3565

GBP/USD is pinned around the 1.3530–1.3565 zone, with spot oscillating roughly between 1.3531 and 1.3540 in Europe and printing about 1.3565 in Asia. Price is sitting almost exactly on the 20-day EMA at 1.3562, reflecting a market locked in balance rather than a clean trend. Under the surface, the pair is being pulled in opposite directions: a softening UK macro backdrop and rising odds of a March rate cut at the Bank of England on one side, and a politically bruised but rate-supported USD on the other.

UK Disinflation, Labour Softness And The BoE’s March Problem

Pressure on the pound starts with the data. UK inflation is decelerating faster than expected. January CPI dropped to 3.0% from 3.4% in December, the lowest level since mid-2025 and only one percentage point above the 2.0% target. A four-tenths fall in a single month, combined with a weakening labour market, has pushed the internal conversation at the Bank of England away from “how long to stay restrictive” toward “how soon to start cutting”.
Within the Monetary Policy Committee, one wing led by Alan Taylor is already floating the idea that two or three cuts may be needed “soon” to avoid an unnecessary downturn, with the first move as early as March. That path would shift the bank rate decisively lower over the year and compress the yield advantage that supported GBP/USD during the prior cycle.
Opposing that stance, Governor Andrew Bailey and Chief Economist Huw Pill emphasise stubborn services inflation and warn against cutting too early. That disagreement is exactly what the chart is showing: futures are pricing real probability of a March move but not treating it as a done deal, so sterling is not collapsing, yet every push higher into the mid-1.36s quickly finds supply.

US Dollar: Tariffs, Supreme Court Friction And A Fed That Refuses To Ease

On the dollar leg, the story is policy noise laid over a still-restrictive central bank. The US Dollar Index (DXY) is trading in the 97.50–97.65 area. On a 2-hour chart, price hovers near 97.63, with a rising trendline around 97.40 and the 200-EMA at 97.35 providing structural support. The 50-EMA is parked almost exactly at 97.60 and acts as a short-term fulcrum. Above, resistance layers stand at 98.07, 98.41 and 98.83. Since the drop toward 96.60, price has been climbing in a shallow ascending channel. Candles show small bodies and low wicks just above 97.40–97.60, a classic sign that dips continue to attract buyers but momentum is not explosive. RSI around 48 confirms a neutral tone in the broader dollar basket.
The political backdrop is the drag. President Donald Trump has doubled down on tariffs after the Supreme Court knocked back parts of the earlier plan as “unlawful” under emergency powers. Instead of the previously floated 15%, Section 122 tariffs have been set at 10%, yet the exact percentage is less important than the message: tariff policy is fluid, contested in court and deeply uncertain. The IMF’s Kristalina Georgieva has already pointed out that these measures are lifting US goods inflation while the federal debt profile demands serious consolidation. That combination weighs on the dollar’s medium-term appeal.
At the same time, Federal Reserve rhetoric is keeping rate-cut hopes in check. Chicago Fed President Austan Goolsbee has stated that the inflation picture did not improve enough last year and remains above target. Boston Fed President Susan Collins has reinforced that holding rates steady remains the sensible course while the labour market is still strong and price gains are too high. This stance keeps US yields elevated and prevents USD from breaking down despite political noise, creating a floor under DXY near 97.40 even as headlines cap moves through the upper 98s.

Technical Setup: Rising Channel From 1.3407 And Symmetrical Triangle At 1.3530

On the GBP/USD chart, price is not trending; it is coiling. On the 2-hour timeframe, the pair is moving inside a rising channel drawn from the 1.3407 low, which marked the base of the latest recovery leg. At the same time, swings between roughly 1.3435 and 1.3575 are forming a symmetrical triangle with a pivot just above 1.3530.
Short-term moving averages reinforce that compression. The 50-EMA on the 2-hour chart sits just above 1.3530 and acts as an intraday balance line. The 200-EMA at 1.3580 is the immediate cap that has repeatedly rejected attempts to extend higher. On the daily timeframe, the 20-day EMA at 1.3562 is being tested from both sides as candles cluster around it.
Momentum indicators line up with this picture. One read shows RSI at 55, reflecting a neutral-to-slightly bullish bias. Another shows 58 on the shorter horizon, while the 14-day RSI oscillates in a 40.00–60.00 band that signals consolidation instead of a directional trend. Taken together, that says the market has not picked a side yet, even if the structure carries a mild upside lean inside the channel.

Key Levels: Why 1.3531 Is The Hinge And 1.3407 Is The Structural Floor

The market has defined a clear ladder of levels around GBP/USD. At the centre is the 1.3531–1.3530 band. This horizontal shelf has repeatedly arrested downside during the week and built a sequence of higher lows. FXLeaders flags 1.3531 as the must-hold area for the bullish structure, while other views treat 1.3530 as the line in the sand separating compression from a deeper pullback.
Directly underneath sits a dense support zone. Levels at 1.3504, 1.3474, 1.3467, 1.3435 and 1.3432 define the first group where short-term momentum switches can occur. DailyForex uses 1.3504, 1.3467 and 1.3432 as tactical long re-entry points on bullish reversals. Slightly wider swing markers show 1.3434 as the February 19 low, aligning with this block.
Below those intraday supports, 1.3407 is the structural floor. That low underpins the entire current recovery channel. If price slices through 1.3430–1.3435 and then loses 1.3407, the pattern that started in January is essentially broken and the focus shifts to deeper levels such as 1.3344, which marks the January 19 low and the next major downside objective on a broader timeframe.
Above spot, the immediate upside test is the 1.3558–1.3580 band. The 1.3558 level is a recent swing high that has to give way to unlock further gains. Just above it, 1.3575 is the upper edge of the current triangle and 1.3580 is the 2-hour 200-EMA that has capped every attempt to trend higher. Clearing this ceiling opens a path toward 1.3615, defined as the first major resistance above the range. If price can sustain above that, the next upside steps are 1.3665, 1.3712 – the February 11 high – and ultimately 1.3869, which stands as an almost four-year high and the natural long-term bullish target if the channel matures into a new impulsive leg.

Short-Term Trade Structures Around 1.35

The way the market is using these levels is visible in the intraday strategies built around them. One framework has treated the 1.3467–1.3550 corridor as the primary London range. The idea was that the best opportunities would come from rejections at either edge of that band. That view played out to a point: as the London session ended, GBP/USD broke above 1.3550, briefly retested it as support, then lost momentum and slid back through two former supports. That pattern showed that the range remains valid and that the market is not ready to trend cleanly away from 1.35.
A more systematic approach from DailyForex defines explicit execution rules. Risk is capped at 0.75% per setup, and trades are only valid before 17:00 London time. For the long side, the focus is on H1 bullish reversal signals such as pin bars, doji candles or engulfing closes at 1.3504, 1.3467 or 1.3432. Stop-loss is placed one pip below the local swing low. Once price advances 25 pips, the stop is moved to break-even, half the position is taken off and the remainder is left open to capture further extension.
For the short side, symmetric rules apply. Bearish reversal patterns at 1.3536, 1.3549 or 1.3603 trigger entries, with stop-loss set one pip above the swing high. Again, once 25 pips are secured, risk is neutralised and partial profits are booked. This structure confirms that market participants are trading around the key levels rather than committing to a one-directional move.
A more directional blueprint focuses on breakouts rather than mean reversion. One scenario is to wait for an hourly close above 1.3558 and particularly above 1.3580, then aim at 1.3615 with stops anchored around 1.3520 or deeper around 1.3474, depending on how much room is acceptable. The opposite scenario is to treat a clear 4-hour close below 1.3530–1.3531 as confirmation that buyers have lost control and shift the focus to 1.3474 and 1.3440 as the next downside checkpoints, with 1.3407 as the wider objective if selling accelerates.

Macro Triggers: March BoE Decision Versus US Tariff Path And Data Flow

The next decisive move in GBP/USD will likely come when the fundamental side resolves some of the current ambiguity. On the UK side, the March Bank of England meeting is the central event. A 25-bp cut framed as the first instalment of two or three moves this year would validate the dovish wing inside the bank and justify a repricing lower in sterling. Given the current setup, a cut of that type, especially if paired with softer labour data or another CPI print closer to or below 3.0%, would make a break below 1.3531 and a slide into the 1.3474–1.3435 band the base case, with a move towards 1.3407 and even 1.3344 entirely plausible over the following weeks.
If Bailey and Pill manage to hold the majority and push back the first cut, emphasising services inflation and wage stickiness, the rate profile remains more supportive for sterling than what is currently embedded in pricing. In that scenario, GBP/USD would have room to squeeze through 1.3558, attack 1.3580 and then 1.3615, with 1.3665 and 1.3712 coming back into play as higher targets.
On the US side, two layers drive the outlook. The first is tariffs and the Supreme Court dispute. Section 122 tariffs locked at 10% instead of 15%, partial court blocks of earlier measures, warnings of steeper levies if partners seek to reopen trade deals, and IMF criticism that these policies fuel inflation and fiscal risk all weigh on sentiment. This background limits how far DXY can run beyond the 98.40–98.80 resistance cluster without a material change in the narrative.
The second layer is the Fed and incoming data. As long as Goolsbee, Collins and others keep signalling that rates should stay where they are because inflation remains above goal and the job market is tight, any upside surprise in numbers such as US Unemployment Claims at 13:30 London time will feed the idea of “higher for longer”. That configuration supports DXY above 97.40 and makes it hard for GBP/USD to sustain moves deep into the 1.37–1.39 region even if the BoE delays cutting.

Stance On GBP/USD: Bearish Bias, Sell On Strength While 1.3615 Holds

Putting all components together – UK CPI falling to 3.0% from 3.4%, a live debate inside the Bank of England over two or three rate cuts starting possibly in March, services inflation that still prevents a fully dovish shift, US tariff policy that damages the dollar’s reputation while the Fed keeps rates high, DXY holding above 97.40 with room toward 98.07–98.83, and GBP/USD trapped between 1.3430 and 1.3580 in a rising channel and triangle – the current configuration does not support chasing a breakout in the middle of the band.
The balance of risk, however, leans slightly to the downside for GBP/USD. With the BoE closer to cutting than the Fed, and with sterling already pricing a decent amount of good news from earlier highs near 1.3869, rallies into resistance look more vulnerable than dips into support. As long as 1.3580–1.3615 caps the upside on closing bases, the preferred stance is bearish with a “sell on strength” approach, using the 1.3558–1.3615 block as a region where risk can be defined and targeting 1.3504, 1.3474 and 1.3435 initially, with 1.3407 as the deeper objective if the March BoE decision confirms the easing path. A decisive daily close above 1.3615 followed by follow-through toward 1.3665 would be the signal that this bias is wrong and that a reassessment is needed.

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