GBP/USD Price Forecast: Strengthens above 1.3600 as bullish trend holds above 100-day SMA

Market impact: Moderately bullish for GBP/USD, but increasingly vulnerable to a pullback.

The key driver is a relative shift in monetary-policy expectations: softer US labor and inflation signals have reduced expectations of a September Federal Reserve hike, weakening the dollar’s rate advantage. At the same time, markets still price a possible Bank of England hike by year-end, supporting sterling through the interest-rate differential. Treasury buyback operations may also be easing some pressure in US bonds and yields, reinforcing the near-term dollar-negative backdrop.

For GBP/USD, the technical structure supports continuation: spot is above the 100-day SMA and the Bollinger mid-band, keeping the medium-term trend constructive. A sustained break above 1.3645 would strengthen the case for an extension toward the 1.3700 psychological area, while the January 27 high at 1.3869 represents a more significant medium-term resistance zone.

However, the move is not unambiguously bullish. RSI near 68.7 indicates strong momentum but leaves the pair close to overbought territory, increasing the risk of profit-taking if incoming US data fails to confirm further dollar weakness. Initial downside risk is centered near 1.3519, followed by the 1.3465–1.3425 support cluster, including the 100-day SMA. A sustained break below that area would weaken the bullish technical interpretation.

The fundamental signal is therefore positive but asymmetric: GBP/USD can remain supported while US rate-hike expectations continue to fall, but sterling’s upside may be limited if moderating UK wage and employment pressures lead markets to reduce expectations for BoE tightening. The article notes that underlying UK pay growth and PAYE employment are weakening, which could eventually shift the policy differential back against the pound.

Traders should monitor next:

• US initial jobless claims and subsequent US inflation or labor-market releases, as stronger data could revive Fed tightening expectations.
• UK wage, employment, and inflation data for confirmation that BoE tightening remains plausible.
• US Treasury yields and the dollar index, which will help determine whether the move is GBP-specific or part of a broader dollar decline.
• Whether GBP/USD can hold above 1.3600 and clear 1.3645 without a momentum reversal.

Overall, the setup favors continued GBP/USD strength in the short term, but the combination of stretched momentum and easing UK labor conditions makes confirmation essential rather than assuming a durable breakout.