British Pound Forecast: GBP/USD Selloff Stalls Ahead of BoE Meeting

British Pound Outlook: GBP/USD

The recent selloff in GBP/USD seems to be stalling as it no longer carves a series of lower highs and lows, but the Bank of England (BoE) meeting may produce headwinds for the British Pound as the central bank is expected to implement a 25bp rate cut.

British Pound Forecast: GBP/USD Selloff Stalls Ahead of BoE Meeting

Keep in mind, GBP/USD cleared the 2024 high (1.3434) as it rallied to a fresh yearly high (1.3445) last week, and the exchange rate may continue to track the positive slope in the 50-Day SMA (1.3021) as it holds above the moving average.

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In turn, GBP/USD may continue to reflect a bullish trend as the ongoing shift in US trade policy drags on the Greenback, and it remains to be seen if the Federal Reserve will further unwind its restrictive policy as the central bank insists that ‘we do not need to be in a hurry to adjust our policy stance.’

UK Economic Calendar

Meanwhile, the BoE is expected to reduce its benchmark interest rate to 4.25% from 4.50% after sitting on the sidelines at its last meeting, and the updates from the central bank may sway GBP/USD should the Monetary Policy Committee (MPC) offer a dovish forward guidance.

With that said, GBP/USD may struggle to retain the rebound from the start of the week should the BoE prepare UK households and businesses for more rate cuts, but the exchange rate may further retrace the decline from the yearly high (1.3445) if the central bank endorses a ‘gradual and careful approach to the further withdrawal of monetary policy restraint.’

GBP/USD Price Chart – Daily

Chart Prepared by David Song, Senior Strategist; GBP/USD on TradingView

• GBP/USD attempts to trade back above 1.3310 (100% Fibonacci extension) as it halts a four-day selloff, with a move/close above 1.3410 (78.6% Fibonacci retracement) bringing the April high (1.3445) on the radar.
• Next area of interest comes in around the February 2022 high (1.3644), but lack of momentum to hold/close above 1.3310 (100% Fibonacci extension) may push GBP/USD towards 1.3210 (50% Fibonacci extension).
• A break/close below the 1.3140 (78.6% Fibonacci extension) to 1.3150 (23.6% Fibonacci extension) region opens up 1.3010 (61.8% Fibonacci extension), with the next area of interest coming in around 1.2900 (23.6% Fibonacci retracement) to 1.2910 (50% Fibonacci extension).

Additional Market Outlooks

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Canadian Dollar Forecast: USD/CAD Vulnerable to Fresh Yearly Lows

USD/JPY Defends Rebound from Monthly Low Ahead of BoJ Rate Decision

British Pound Forecast: GBP/USD on Cusp of Testing 2024 High

--- Written by David Song, Senior Strategist

Follow on Twitter at @DavidJSong