**GBP/USD Price Forecast: Pound to Dollar Holds Above 1.34 as Fed Cut Bets Offset BoE Dovish Pressure**
*Original Article by: TradingNews Analyst Team – [source: TradingNews.com](https://www.tradingnews.com/news/gbp-usd-price-forecast-pound-to-dollar-holds-above-1-34-fed-cut-bets-offset-boe-dovish-pressure)*
The Pound Sterling (GBP) has maintained a steady position above the critical 1.34 level against the US Dollar (USD) as the foreign exchange (forex) market remains gripped by conflicting influences from both sides of the Atlantic. Despite persistent dovish signals from the Bank of England (BoE), the GBP/USD pair is finding ongoing support as growing market bets on Federal Reserve interest rate cuts offset any Pound-negative pressures.
This article explores the evolving dynamics shaping the GBP/USD exchange rate, analyzing market sentiment, the impact of central bank policies, key economic data, and potential scenarios for the currency pair in the near to medium term.
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**1. The GBP/USD: Anchored Above 1.34**
The GBP/USD currency pair’s hold above the psychologically significant 1.34 threshold draws attention from traders and investors worldwide. After some choppy sessions in mid-week trading, the pair managed to consolidate its recent gains, refusing to surrender ground below support even as the UK grapples with policy and economic headwinds.
**Key themes underpinning the pair:**
– Continuing investor uncertainty about the Federal Reserve’s next move
– Persistent, though mild, dovish rhetoric from Bank of England officials
– Divergent economic growth and inflation profiles between the UK and US economies
– Technical resilience around the 1.34 price level
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**2. Market Sentiment: Fed Rate Cut Bets Dominate**
The main source of support for the British pound in recent trading stems from shifting market expectations regarding US monetary policy. With a steady drumbeat of softer-than-expected US economic data, financial markets have increasingly priced in a high probability of interest rate cuts from the Federal Reserve in the coming months.
**Why is the market anticipating Fed cuts?**
– Recent US inflation prints, while still elevated, have shown signs of deceleration from previous peaks
– US labor market data have started to show some signs of softening, raising questions about the economy’s resilience
– Global growth outlook remains mixed, giving the Federal Reserve room to ease if necessary
Traders have therefore been quick to pare back their bets on further USD strength, instead looking for opportunities in pairs like GBP/USD where the risk-reward profile appears more balanced. This has allowed the pound to hold firm even as news from the UK has been less optimistic.
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**3. Bank of England Dovish Pressure**
While the Federal Reserve’s outlook has turned more cautious, the Bank of England’s own tone has added mild headwinds to the pound’s performance.
**Key factors driving BoE dovishness:**
– Recent UK inflation readings have moderated: Both the headline and core measures have gradually retreated toward the BoE’s 2% target, reducing the urgency for further monetary tightening.
– Slowing UK growth: Economic indicators such as GDP, consumer confidence, and retail sales suggest that the British economy is operating close to stall speed.
– BoE officials’ commentary: Several policymakers have signaled a willingness to support growth and consider easing measures if downside risks materialize.
Despite this backdrop, the pound’s resilience suggests that external factors, particularly expectations around Fed policy, are the dominant driver at the moment.
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**4. Economic Data: UK and US in Focus**
Market participants continue to monitor a steady flow of economic releases for clues about the next moves from both central banks and potential shifts in the GBP/USD exchange rate.
**Summary of key data:**
*UK:*
– **Inflation:** Recent figures show continued moderation, but services inflation remains somewhat sticky
– **GDP:** Q
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