• The GBP/USD forecast is bearish amid a hawkish Fed.
• Geopolitical concerns continue to weigh on the pound.
• Markets are now awaiting BoE policy decision and statement.

The GBP/USD forecast has turned slightly bearish after staying subdued for the third consecutive session. The pair is trading around 1.3415, at the time of writing.

The British pound is struggling as the US dollar demand rises due to safe-haven flows stemming from Iran-Israel conflict. On the other hand, FOMC meeting surprised the markets with a hawkish tilt. Now, the market participants await Bank of England policy meeting and statement, due later today.

On Wednesday, the GBP/USD pair found a mild support after the UK CPI print came better than expected. However, the inflation is still ticking down. That’s why the pound could not capitalize on the move. The last week’s dismal GDP and employment data continue to add pressure on the Bank of England to retain the easing policy.

On the geopolitics front, the Iran-Israel war has entered the seventh day. According to Bloomberg report, the US officials are preparing to attack Iran in the coming days. Another report from Wall Street Journal also claimed that the US President had approved attacks on Iran on Tuesday but he wanted to see if Iran would abandon its nuclear program.

Moreover, the Greenback found additional support from the Fed Chair Powell’s comments. He signaled that the inflation is still somehow above their targets and could rise again in near future due to Trump tariffs. Powell also supported currency policy program, leaving them well positioned. He reiterated that the Fed will hold rates and cuts will depend primarily on the inflation and labor data.

The FOMC kept the rates unchanged at 4.25% – 4.50%, as widely anticipated. The central bank still expects a 50 bps cut by the end of 2025.
 

GBP/USD Technical Forecast: Sellers Pause at 1.3400

(Click on image to enlarge)

GBP/USD 4-hour chart

The GBP/USD 4-hour chart shows a mild support around 1.3400. However, the previously broken support at 1.3418 now acts as a resistance. If the price holds around current resistance, it may fall towards the next support at 1.3340. The RSI is near the oversold area which indicates the pair may see some buying.

However, the price staying below the 20-period SMA shows the bears are in control for now. The markets may consolidate around the current levels before finding any directional bias.

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