**GBP/USD Price Forecast: Pound Holds 1.35 After BOE Cut as Bulls Target 1.36**
*By TradingNews.com staff, attributed to the original author at TradingNews.com*
The British pound sterling (GBP) has rallied impressively against the US dollar (USD), maintaining its ground at the 1.35 level even after the Bank of England (BOE) delivered a surprise interest rate cut. This resilience is fueling optimism among traders and analysts, with many now targeting the 1.36 handle and beyond.
This article provides an in-depth analysis of the current GBP/USD dynamic, market drivers following the BOE’s policy move, and potential scenarios for currency traders in the coming weeks.
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### The Context: BOE’s Surprise Interest Rate Cut
On its latest monetary policy meeting, the Bank of England shocked the markets by cutting the base rate by 25 basis points. This move came in response to a combination of weak economic data, persistent inflation worries, and growing uncertainty around the global outlook. While central banks around the world have steered towards dovish stances due to fragile growth prospects, the BOE’s action was notable given recent hawkish commentary.
**Key takeaways from the BOE’s rate cut:**
* Aimed to support flagging economic growth amid global uncertainties
* Intended to tame inflation pressures, but with an eye on avoiding recession
* The cut firmed market expectations of a dovish policy trajectory in 2024
* Immediate impact was a kneejerk dip in the pound, quickly retraced on fresh buying
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### Pound’s Resilience: Why GBP/USD Holds 1.35
Contrary to the typical playbook, where a rate cut depresses a currency, sterling rebounded robustly from the 1.34 area to reclaim the 1.35 handle. Several factors underpinned this resilience:
#### 1. Positioning and Oversold Conditions
Sterling had been under sustained selling pressure in the weeks leading up to the BOE decision. Many traders had built short positions, betting on dovish outcomes. Once the decision was out and matched those pessimistic expectations, bears rushed to take profits, while bargain hunters snapped up the pound at lower levels.
#### 2. Diminishing Dollar Momentum
The US dollar had powered higher throughout much of the first quarter, buoyed by expectations of persistent Federal Reserve hawkishness. However, as US economic data began underwhelming and market participants anticipated a pause in Fed hikes, dollar bulls took profits. The softer greenback provided the perfect backdrop for sterling to catch a bid.
#### 3. UK Data Surprises
Shortly after the rate cut, several UK economic figures—most notably job numbers and core inflation—came in above forecasts. This painted a picture of an economy that, while not firing on all cylinders, maintained enough momentum to comfort investors worried about stagflation or a deep recession.
#### 4. BOE Forward Guidance
While dovish in its immediate action, the BOE signaled a wait-and-see approach for subsequent meetings. Some members expressed concern about lingering inflation, suggesting a reluctance for aggressive easing. This tempered expectations for further rate cuts and boosted GBP sentiment.
#### 5. Technical and Psychological Significance
The 1.35 level is a well-watched technical and psychological pivot for GBP/USD. After slicing below it ahead of the BOE, the pair’s swift recovery hinted at strong underlying demand, with momentum traders piling in what looked like a classic “bear trap.”
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### Bulls Set Sights on 1.36 and Beyond
With the pound having weathered the BOE cut, attention turns to the next upside targets. The near-term focus is now the 1.36 resistance, with a clear path if buyers continue to dominate.
**Key bullish factors pushing GBP/USD higher:**
* Diminished fears about aggressive UK rate cuts
* Stabilization of UK
Read more on GBP/USD trading.