**GBP/USD Price Targets 1.3500 as Pound Rallies on Hawkish BoE Cut and US Weakness**
*By TradingNews Staff*
The GBP/USD currency pair continues to command attention in the forex markets as the British pound surges against the US dollar, brushing aside recent rate adjustments from the Bank of England (BoE) and taking advantage of mounting weakness in the US dollar. This rally has fueled bullish sentiment among traders, with technical and fundamental signals suggesting a drive toward the psychologically significant 1.3500 price target.
#### Overview: Drivers Behind the Recent GBP/USD Strength
Several interconnected factors are propelling the pound higher, including shifts in central bank policy, diverging macroeconomic data from the UK and US, and changing market expectations. Key drivers include:
– The Bank of England proceeding with a ‘hawkish cut,’ sparking confidence among market participants that rate reductions will be limited and that the BoE remains committed to tamping down inflation.
– Persistent signs of US economic slowdown, which have eroded the dollar’s safe-haven appeal.
– Technical breakouts on the GBP/USD daily chart, lending credence to further pound advances.
#### Dissecting the BoE’s Hawkish Cut
At its most recent monetary policy meeting, the BoE delivered a highly anticipated 25-basis-point rate cut. However, this action was widely interpreted as a ‘hawkish cut,’ a term used when central banks reduce rates but emphasize that future cuts will be cautious and data-dependent.
##### Main takeaways from the BoE’s policy stance:
– While the rate cut marked an initial step toward loosening policy, the BoE maintained a resolute tone regarding inflation risks.
– Policymakers stressed that inflation is still too high and that they would not hesitate to re-tighten if necessary.
– Market participants interpreted this stance as a clear signal that the BoE’s rate-cutting cycle would be shallow compared to other central banks, particularly the US Federal Reserve.
– The pound’s positive reaction post-announcement reflected this bullish reassessment, with traders betting the UK will now command a higher real yield.
#### The US Dollar’s Weakness as a Tailwind
The US dollar index (DXY) has been under notable pressure, with several drivers combining to push the greenback lower:
– US economic releases have disappointed, particularly in labor market and manufacturing data, raising concerns about a possible hard landing for the US economy.
– Recent Federal Reserve commentary and dot plot projections indicate greater receptivity to interest rate cuts later in the year.
– Trader sentiment has shifted firmly bearish on the dollar, with speculative positioning in the futures market indicating bets on further declines.
##### The effects of a softening dollar include:
– Improving relative attractiveness of sterling assets.
– Increased capital flows into the UK as investors seek higher returns.
– Downward pressure on GBP/USD volatility as risk reversals favor pound calls.
#### Technical Analysis: Paving the Path to 1.3500
Price action and key indicators suggest that GBP/USD is on the cusp of another technical breakout. The following factors are reinforcing the pair’s bullish momentum:
– The pair has cleared resistance at the 1.3300 level, a threshold that had capped advances for much of the past month.
– The 50-day and 200-day moving averages have both turned upward, signaling sustained bullish intent.
– The Relative Strength Index (RSI) continues to ascend, but is not yet overbought, leaving ample room for further gains.
##### Key technical levels on the radar:
– **Immediate resistance:** 1.3350 and 1.3400, corresponding with early-year swing highs.
– **Primary target:** 1.3500, a level notable for both psychological and historical significance.
– **Support zones:** 1.3240 (previous resistance turned support), followed by 1.3120.
#### Fundamental Catalysts to Monitor
The coming weeks feature several events and data
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