Two Trades To Watch: GBP/USD, DAX Forecast - Thursday, March 19

GBP/USD struggles around 1.43250 ahead of the BoE rate decision

• Hawkish Fed lifts USD and yields

• UK unemployment remained at 5.2%, and wage growth slowed to 3.8%

• BoE is expected to leave rates unchanged

GBP/USD is struggling around 1.32 after UK jobs data, a hawkish twist from the Federal Reserve, and ahead of the Bank of England rate decision.

The Fed left interest rates unchanged at 3.5%–3.75%, in line with expectations. The central bank revised its 2026 inflation forecast higher to 2.7% from 2.4% and raised its growth forecast to 2.4%, which surprised markets. While the dot plot still suggests the Fed will cut rates once this year, Chair Powell said inflation was not cooling as much as hoped, giving the meeting a hawkish bias. He also said it was too early to assess the impact of the Iran war on the economy. Following the meeting, Treasury yields and the US dollar moved higher.

Today, attention turns to the Bank of England. Ahead of the meeting, data showed that UK unemployment unexpectedly remained unchanged at 5.2%, versus forecasts for a rise to 5.3%. The number of payrolled employees rose by 20,000, which could be a sign that the slowdown in the labour market may be stabilising. Wage growth was weaker at 3.8%, down from 4.1%.

These figures are not expected to significantly impact the Bank of England, which is widely expected to leave rates unchanged at 3.75% at its March meeting. Previous expectations of a 25 basis point rate cut have been priced out amid rising energy prices linked to the Iran war.

The focus will be firmly on the Bank of England’s outlook at a time when the Iran war and surging oil prices are clouding the picture ahead.

Markets are also pricing in the possibility that the Bank of England could hike rates by the end of the year.

GBP/USD forecast technical analysis

After running into resistance at 1.3870 GBP/USD rebounded lower. The pair trades within a falling channel, finding support at 1.3220. The recovery from this support faced rejection at 1.3350, reinforcing the bearish bias.

Sellers will look to extend the bearish move by breaking below 1.3220 towards 1.31, the lower band of the falling channel. Below here 1.30 comes into focus.

Any recovery would need to rise above 1.3350 resistance and the 200 SMA at 1.3440 to put the pair on a firmer footing.

DAX falls sharply as energy prices jump & ahead of the ECB

• DAX falls as Middle East tensions escalate

• Oil surge fuels inflation concerns

• ECB expected to hold rates at 2%

The DAX is trading under pressure, falling almost 2%, as the intensifying conflict in the Middle East hurts risk appetite ahead of the ECB rate decision.

Oil prices jumped above $110 per barrel following attacks by Iran on energy infrastructure across the Middle East. In a major escalation of the conflict, Iran launched attacks on energy facilities in the region following a strike on the South Pars gas field, the world’s largest natural gas field.

Gas prices in the UK and Europe surged following the strike. European gas prices traded more than 25% higher on the wholesale market before easing back slightly.

Europe is particularly vulnerable to rising oil and energy prices, given its reliance on imported energy.

These price rises are expected to add inflationary pressure to the economy.

Attention is also turning to the ECB rate decision today, where the central bank is expected to leave interest rates unchanged at 2%, with inflation close to the ECB’s 2% target.

However, ECB President Christine Lagarde could adopt a more hawkish tone in her speech, given expectations of rising inflationary pressure caused by higher energy prices linked to the Middle East conflict. This could weigh on demand for stocks such as the DAX.

DAX forecast -technical analysis

From a peak of 25,400 at the end of February, the DAX rebounded lower, breaking below the 200 SMA and the multi-month rising trendline, spiking to a low of 22,700. The recovery from this low failed to retake the trendline resistance, reinforcing the bearish bias.

Sellers will look to break below 22,900, the November low and 22,700, the 2026 low, to create a lower low and extend the bearish move towards 22,500.

Any recovery needs to rise above 23,400 horizontal resistance and 24,200, the confluence of the 200 SMA, rising trendline and January low. Above here, the price is on a firmer footing.