GBPUSD: Bullish Bias as BoE Pushback Meets Softer U.S. Inflation

Summary – GBPUSD

• Current price: ~1.3319
• Immediate Resistance: 1.3400 (psychological level), followed by 1.3450 and 1.3500
• Support Levels: 1.3300 (near-term base), then 1.3260 (May 3 low)
• Momentum: Bullish bias intact above 1.3300, with RSI and MACD signaling moderate upside potential

Cable is approaching the key 1.3400 level, which, if cleared, could trigger momentum toward 1.3500. Near-term dips may find support around 1.3260–1.3300, especially if incoming UK data remains stable and USD softens further.

Fundamental Drivers

UK – Dovish Cuts, Hawkish Dissent

• BoE cut rates to 4.25% on May 8 — its fourth straight reduction since August 2024.
• However, BoE hawk Catherine Mann dissented, citing:
  • Persistent goods inflation
  • Strong labor market and wage growth
  • Firms raising prices above cost pressures
• BoE forecasts CPI inflation to peak at 3.5% in Q3, then gradually fall back to the 2% target by 2026.

Interpretation: Despite the rate cut, BoE pushback from hawkish members is slowing the pace of easing, lending support to GBP.

U.S. – Cooling Inflation Supports Dovish Fed Shift

• April CPI rose just 0.2% m/m, leading to headline inflation falling to 2.3%, the lowest since 2020.
• Markets now price the first Fed cut by September, with possible follow-through in December.
• This has weakened the USD, particularly against currencies with more hawkish or neutral central banks like GBP.

Interpretation: The dollar has lost its rate advantage, allowing GBPUSD to climb amid U.S. disinflation and falling real yields.

Key Watchpoints Ahead

• UK GDP release (this week): A positive surprise could reinforce the BoE's cautious stance and add GBP tailwinds.
• U.S. PPI and Retail Sales: Any renewed strength could push back rate cut bets and revive USD strength.
• BoE and Fed speeches: Watch for confirmation of the diverging paths — BoE easing slowly, Fed preparing to cut.

GBPUSD – H4 Timeframe

The 4-hour timeframe chart of GBPUSD shows price entering a supply zone that lies right on top of the resistance trendline whilst sitting within the key region of the Fibonacci retracement tool. The double bearish break of the structure is another critical factor worth considering.

Analyst's Expectations: 

Direction: Bearish

Target- 1.31640

Invalidation- 1.34145

CONCLUSION

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