GBP/USD Price Forecast: Bullish Outlook Holds Near 1.3450
By Lallalit Srijandorn | August 26, 2025, 04:29 GMT
The GBP/USD currency pair is showing mild losses around the 1.3450 mark in Tuesday’s early European trading session. Despite the slight dip, the overall sentiment remains positively skewed for the British pound against the US dollar, supported by technical fundamentals and recent political developments.
Market Context and Recent Developments
The pair’s potential downside appears to be limited following US President Donald Trump’s announcement that he has decided to fire Federal Reserve Governor Lisa Cook. This unprecedented move has stirred concerns regarding the independence of the Federal Reserve, sparking uncertainty around the US dollar and prompting cautious market behavior.
As a result, the GBP/USD exchange rate has seen modest downward adjustment but remains well-supported above a key technical level, which underpins the bullish outlook.
Technical Analysis
From a technical standpoint, GBP/USD is comfortably trading above the 100-day Exponential Moving Average (EMA) on the daily chart—an important indicator signaling sustained upward momentum. However, near-term price action suggests a phase of consolidation, supported by the neutral stance of the 14-day Relative Strength Index (RSI), which hovers around its mid-point without indicating overbought or oversold conditions.
Key resistance levels to watch include:
- 1.3585: The high reached on August 13 – a strong immediate barrier.
- 1.3635: The upper boundary of the Bollinger Bands, which could provide the next momentum boost if surpassed.
- 1.3752: The high established on July 2 – a longer-term target if bullish momentum strengthens.
On the downside, initial support is found at the August 21 low of 1.3405. A break below this level could extend losses toward the 100-day EMA near 1.3360. A more critical support zone lies between 1.3210 and 1.3200, representing the lower Bollinger Band threshold and an important psychological level for traders.
Understanding the Pound Sterling
The British pound (GBP), also known as the Pound Sterling, is the official currency of the United Kingdom and is the world’s oldest currency still in use, dating back to 886 AD. It remains a major player in the foreign exchange (FX) markets, representing around 12% of all daily FX trading, equivalent to an average volume of $630 billion as of 2022. GBP is prominently traded against several currencies, with GBP/USD—nicknamed ‘Cable’—accounting for approximately 11% of all FX transactions. Other notable pairs include GBP/JPY (referred to as the ‘Dragon’) and EUR/GBP.
Factors Influencing GBP/USD
Bank of England’s Monetary Policy
Decisions by the Bank of England (BoE) strongly influence the pound’s value. The BoE targets price stability, aiming for inflation around 2%, and uses interest rate adjustments as its primary tool. Rising interest rates tend to strengthen the pound by attracting investment, while rate cuts may weaken the currency.
Economic Data
Economic indicators such as GDP, Purchasing Managers’ Indexes (PMIs), and employment figures impact market expectations for the BoE’s policy decisions and overall economic health, thereby influencing GBP’s strength.
Trade Balance
The UK’s trade balance also affects GBP. A positive trade balance, where exports exceed imports, tends to support the currency due to increased demand from foreign buyers.
Conclusion
While GBP/USD exhibits slight weakness near 1.3450 in early trading, the pair maintains a bullish stance supported by technical benchmarks and geopolitical developments that potentially weaken the US dollar. Traders should monitor the key resistance at 1.3585 and support at 1.3405 for potential breakout or breakdown signals in the near term.
Disclaimer: This analysis is for informational purposes only and does not constitute financial advice. Trading foreign exchange involves risk, including loss of principal. Readers should conduct their own research or consult with a financial advisor before making investment decisions. The author and FXStreet do not guarantee the accuracy or timeliness of this information.