The GBP/USD pair is experiencing a slight decline, hovering around 1.3535 in early trading on Thursday. Traders seem to be adopting a cautious stance ahead of key economic reports, including the UK’s gross domestic product (GDP) and US retail sales, both set to be released later today.
There’s been a notable increase in speculation regarding a potential interest rate hike by the Bank of England (BOE) this year, particularly as rising oil prices could impact inflation. Reports indicate that money markets are now fully anticipating rate increases ahead of the November policy meeting, with another hike expected in April 2027. Interestingly, before the recent tensions related to the U.S.-Iran situation, market sentiment suggested that the BoE might actually reduce interest rates twice this year.
Technical analysis:
Looking at the daily chart, GBP/USD is currently above the 100-day simple moving average (SMA) and sits comfortably above the 20-day Bollinger middle band, indicating a generally positive outlook in the short term. The pair is also testing the upper boundary of the Bollinger Bands around 1.3534, hinting at an ongoing, though somewhat cautious, bullish trend. Additionally, the relative strength index near 65 suggests that while there is bullish momentum, it hasn’t yet reached overbought levels.
On the downside, immediate support can be found at the 100-day SMA around 1.3400, with the Bollinger Middle Band at 1.3325 acting as a deeper safety net if we see any corrective movement. A more significant drop could aim for recent lows near the bottom of the Bollinger Band at about 1.3117. Conversely, on the upside, the initial resistance is marked by the high from May 8th at 1.3637. A sustained breach above this point could lead towards that psychological barrier of 1.3700.
