**GBP/USD Price Forecast: Pound at 1.34 – Can the Pound Finally Break the 1.35 Barrier?**
*By: Trading News Team*
*Original article by: TradingNews.com Editors*
The British Pound has been caught in a complex web of fundamental and technical forces as it hovers around the 1.34 level against the US Dollar. After weeks of cautious optimism and intermittent volatility, traders are evaluating whether the GBP/USD pair can finally break and sustain a move above the formidable 1.35 threshold—a level that has acted as both a psychological and technical barrier over the past several months. In this in-depth analysis, we explore the key drivers influencing Sterling’s movement, examine the technical landscape, and assess the outlook for the coming weeks.
## Recent GBP/USD Performance
The Pound Sterling rebounded impressively from late spring lows, supported by a combination of optimistic UK economic data, a steady Bank of England (BoE), and market perceptions of a less hawkish Federal Reserve. After bottoming near 1.23 in early May, GBP/USD staged a rally, eventually reclaiming the 1.30 handle before grinding higher to test the 1.34 ceiling.
### Factors Contributing to Recent Strength:
– **Stronger-Than-Expected UK Economic Data:** Key indicators, including retail sales, PMI readings, and labor market numbers, have exceeded consensus estimates.
– **Relative Stability at the Bank of England:** While not ruling out further hikes, the BoE has struck a comparatively balanced tone, supporting Sterling.
– **Moderation in US Dollar Demand:** The Fed’s signals regarding the end of its aggressive rate hiking cycle have undercut the Greenback’s appeal.
## The 1.35 Hurdle: Historical Context
The 1.35 level has loomed large for GBP/USD traders for years. It is not just a round number but a zone of congested price action dating back to the 2016 Brexit referendum aftermath.
– **Resistance Zone:** On multiple occasions (e.g., January 2021, mid-2022), 1.35 has capped rebounds, prompting sharp reversals.
– **Technical Headwinds:** The area contains key Fibonacci retracement levels, 200-week moving average proximity, and a cluster of former highs and lows.
– **Sentiment Barrier:** Breaking 1.35 would be seen as a significant mood change, indicating confidence in UK assets and improving macro fundamentals.
## Key Drivers for GBP/USD Trajectory
### 1. UK Economic Resilience and Bank of England Policy
The UK economy has outperformed low expectations so far in 2024. Retail sales volumes have rebounded, labor markets have shown unexpected tightness, and inflation has moderated within the BoE’s target band. These factors collectively support a positive bias for Sterling.
– **Gross Domestic Product (GDP) Growth:** Q1 and Q2 data surprised markets, suggesting the UK may avoid recession.
– **Labor Market:** Wage growth remains robust, and jobless claims have stayed low, easing fears of a sharp slowdown.
– **Inflation:** Headline and core CPI readings have decelerated but remain above the BoE’s comfort zone, fueling debate around future rate moves.
– **BoE Rate Expectations:** Markets are pricing in limited further tightening, but “higher for longer” rhetoric is providing underlying support for the Pound.
### 2. US Dollar Dynamics
The US Dollar rally faded as inflation cooled in the US and Federal Reserve officials hinted at a holding pattern. While the Fed remains data-dependent, investors no longer expect aggressive future hikes and are evaluating the timeline for possible cuts.
– **US Data Surprises:** Mixed economic reports, particularly on job growth and consumer spending, have weakened the Dollar’s appeal as a global safe haven.
– **Debt Ceiling and Fiscal Concerns:** Political wrangling in Washington has created uncertainty, denting investor appetite for Dollar assets.
### 3. Technical Analysis Picture
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