GBP/USD dips under 1.3300 as markets await Thursday’s BoE announcement

GBP/USD Slides Below 1.3300 Amid Renewed Selling Pressure

The GBP/USD currency pair dropped by approximately 0.7% on Wednesday, falling beneath the 1.3300 mark as downward momentum intensified. This latest decline extends the retreat from the late January peak near 1.3870, with the pair now positioned under both major daily moving averages. The strong bearish candle formed on Wednesday signals that the recent period of indecision has given way to renewed selling.

The Federal Reserve maintained its interest rates between 3.50% and 3.75%, reiterating its outlook for a single rate cut in 2026. However, comments from Chair Jerome Powell during the press conference boosted the US Dollar, as he acknowledged that inflation has not eased as quickly as the Fed anticipated. The updated Summary of Economic Projections also raised the 2026 core inflation estimate to 2.7%, up from 2.5% in December. Additionally, the Producer Price Index (PPI) for Wednesday came in much higher than expected, rising 0.7% month-over-month compared to the 0.3% forecast, reinforcing the Fed’s hawkish stance.

Attention now shifts to the Bank of England’s (BoE) upcoming rate announcement on Thursday. While markets previously saw an even chance of a rate cut in March, recent oil price shocks in the Middle East have made a cut unlikely, with most expecting rates to remain at 3.75%. The February decision was narrowly split at 5-4 in favor of holding rates steady, and the upcoming vote will be scrutinized for insights into how policymakers are weighing the UK’s slowing growth against persistent inflation. Unemployment in the UK has climbed to a five-year high of 5.2%, yet services inflation reached 4.4% in January, surpassing the BoE’s projections. Governor Andrew Bailey has described the March decision as “genuinely open,” but rising energy prices have reduced the likelihood of imminent easing.

Technical Overview

On the daily chart, GBP/USD is trading near 1.3265. The short-term outlook remains bearish, with the pair staying below the declining 50-day EMA around 1.35 and hovering close to the flatter 200-day EMA near 1.34. This setup points to a weakening medium-term uptrend and increasing downward pressure. A series of lower daily closes from the mid-1.36s to the low-1.33s highlights the dominance of sellers, as any rebounds have failed to surpass the 50-day average. The Stochastic oscillator has turned down from mid-levels and is approaching oversold territory, suggesting continued bearish momentum without clear signs of a completed sell-off.

• Resistance: The 1.3350 zone, just below the 200-day EMA and recent failed rallies, serves as immediate resistance. A move above this level could relieve some downside pressure and pave the way toward 1.3450 and the stronger barrier at 1.3500 near the 50-day EMA.
• Support: On the downside, initial support is found at the recent low near 1.3220. If this level gives way, the next target for sellers is 1.3150. A daily close below 1.3220 would confirm the continuation of the short-term downtrend, while holding above it would keep the pair in a broader consolidation phase around the longer-term average.

(This technical analysis was prepared with the assistance of an AI tool.)