**GBP/USD Price Forecast: Pound Slumps Toward 1.3130**
**Credit: TradingNews.com, Author: TradingNews Desk**
The GBP/USD pair has come under significant selling pressure, with the British pound slumping toward the 1.3130 support region amid a combination of risk-off sentiment, mixed UK economic data, and broad US dollar strength. The recent price movement reflects growing apprehensions surrounding the Bank of England’s future monetary policy amid ongoing global uncertainty and a firm greenback. This comprehensive forecast analyzes the key drivers behind the latest GBP/USD decline, examines technical and fundamental factors, and offers insights into the near-term outlook.
—
### Recent Price Action Overview
– **GBP/USD has slipped sharply from recent highs**: After attempting to climb above the 1.3300 level, the pair reversed course and is now targeting important support near 1.3130.
– **Volatility has increased on mixed signals**: The pound’s broad depreciation coincides with shifting risk appetite in global markets and diverging economic data from the United Kingdom.
– **US dollar dominance remains a theme**: Hawkish commentary from Federal Reserve officials, robust US economic performance, and geopolitical uncertainties have underpinned safe-haven flows into the USD.
—
### Key Drivers Behind the Sterling Decline
#### 1. UK Economic Data Fails to Impress
Recent economic readings out of the United Kingdom have done little to bolster confidence in the pound:
– **GDP growth has stalled**: The latest monthly figures revealed sluggish economic expansion, raising doubts over Britain’s growth trajectory post-pandemic.
– **Labor market momentum is slowing**: Although UK employment remains relatively resilient, wage growth and job creation are moderating, hinting at cooling domestic demand.
– **Inflation remains a concern but shows signs of peaking**: While inflation is still above the Bank of England’s target, recent data points to possible stabilization, reducing the urgency for additional rate hikes.
#### 2. Bank of England’s Dovish Tilt
The Bank of England’s recent policy communications have been perceived as slightly dovish:
– **Reluctance to hike aggressively**: With UK economic data softening, BoE policymakers have opted for smaller rate increases or expressed caution about overtightening.
– **Worries over growth/inflation trade-off**: The BoE faces a delicate balancing act, aiming to control inflation without hammering growth and household demand.
– **Market pricing for rate cuts in 2025**: Investors increasingly believe the BoE will have to pivot toward easing sooner than the US Federal Reserve.
#### 3. US Dollar Remains Well Supported
The greenback’s recent appreciation has been a major factor in GBP/USD weakness:
– **US economic data beats expectations**: Strong retail sales, resilient labor market figures, and robust GDP growth have reinforced confidence in US economic outperformance.
– **Hawkish Fed signals**: FOMC speakers have delayed expectations for rate cuts, reinforcing the appeal of the USD compared to G7 peers.
– **Risk-off sentiment boosts safe-haven demand**: Geopolitical tensions and volatile equity markets have further boosted flows into the US dollar.
—
### Technical Analysis: GBP/USD Faces Key Support
Focusing on the charts, GBP/USD shows a clear shift in momentum:
**Daily Chart Observations:**
– **Breakdown from consolidation**: The pair had been consolidating between 1.3220 and 1.3300 before recent selling pressure pushed it through the bottom of that range.
– **Key moving averages under threat**: The 50-day Simple Moving Average (SMA) near 1.3180 is now acting as initial support, with a sustained break potentially accelerating losses.
– **Bearish RSI divergence**: The Relative Strength Index has dropped below the 50 threshold, signaling growing downside momentum.
– **Fibonacci retracement levels**: The 1.3130 level, corresponding with
Read more on GBP/USD trading.