**GBP/USD Price Forecast: Trades With Positive Bias Above Mid-1.3300s Around 38.2% Fibo Level**
*Original report by FXStreet team*
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**Introduction**
The GBP/USD currency pair maintains a cautiously positive bias as it trades above the mid-1.3300s, hovering around a key Fibonacci retracement level. The pair’s trajectory shows resilience despite a mixed fundamental backdrop that includes Bank of England (BoE) policy expectations, ongoing Brexit-related issues, and developments surrounding the US Dollar. This comprehensive analysis covers the technical and fundamental drivers shaping the current GBP/USD outlook and the potential trading scenarios for the coming days and weeks.
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**GBP/USD Current Overview**
– At the time of writing, GBP/USD is consolidating gains after recovering from recent losses, currently holding above the 1.3350 region.
– The currency pair has managed to find a foothold near the 38.2% Fibonacci retracement level of the recent upward move from swing lows below 1.3200 to highs above 1.3500.
– Market sentiment suggests buyers are re-engaging at support levels, indicating possible further bullishness unless key support areas give way.
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**Fundamental Factors Influencing GBP/USD**
Several fundamental forces are at play in the GBP/USD market:
1. **Bank of England Monetary Policy**
– Recent comments from BoE officials have leaned towards a cautious stance, with some policymakers advocating for a wait-and-see approach regarding interest rates.
– A softening in UK GDP and inflation data has cooled expectations of imminent aggressive tightening, though the BoE still signals further rate hikes may be needed if price pressures persist.
– The market is pricing in gradual rate increases in 2024, which underpins Sterling to some degree but also tempers excessive bullish enthusiasm.
2. **US Dollar Dynamics**
– The US Dollar Index (DXY) remains supported by the Federal Reserve’s hawkish projections and relatively solid US economic data.
– A robust labor market, sticky inflation, and resilience in consumer spending support the Fed’s case for holding rates higher for longer.
– Shifts in risk appetite and safe-haven flows continue to influence the Dollar, contributing to volatility in GBP/USD.
3. **UK Economy and Politics**
– GDP and Manufacturing/Services PMIs have suggested a sluggish start to 2024, with post-Brexit uncertainties and high living costs dampening growth prospects.
– The outlook for the UK economy remains vulnerable to external shocks, including trade disruptions as well as ongoing negotiations with the EU on trade and regulatory divergence.
– Domestic political developments and budget announcements could also sway investor sentiment.
4. **Global Market Sentiment**
– Risk sentiment is being shaped by factors such as global growth worries, geopolitics, and monetary policy divergence among major central banks.
– The GBP, as a risk-sensitive currency, tends to perform better when global equities are rallying and market mood is optimistic.
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**Technical Analysis: Key Levels and Setups**
The technical landscape for GBP/USD shows important chart structures and indicator readings.
**Daily Chart Insights:**
– GBP/USD’s recent bounce has taken it well above the 1.3350 area, a confluence zone containing the 38.2% Fibonacci retracement of the 1.3200-1.3500 move.
– The pair is testing a short-term downward resistance line but remains above the 21-day and 50-day moving averages, signaling underlying strength.
– A daily close above 1.3400 would likely add to bullish conviction, with next upside objectives near recent highs at 1.3500 and beyond.
**Key Support and Resistance Levels:**
– **Immediate resistance:** 1.3400 (psychological round number and pivot area)
– **Next resistance:** 1.3450/1.3500 (recent swing highs)
– **Immediate support:** 1.332
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