GBP/USD price forecast: Pound surges as weak U.S. data fuels Fed rate-cut bets
GBP/USD rises above $1.28 as weak U.S. jobs data strengthens Fed rate-cut expectations
The British pound (GBP) surged above $1.28, its highest level since November 12, as weaker U.S. economic data strengthened market expectations of Federal Reserve (Fed) rate cuts. The GBP/USD pair is trading at 1.2864, gaining over 0.55% as investors digest key U.S. employment and inflation reports.
The U.S. ADP Employment Change report showed that only 77,000 jobs were added in February, significantly missing expectations of 140,000, reinforcing concerns of a slowing labor market. Additionally, while the ISM Services PMI rose to 53.5, signaling business expansion, rising prices within the index fueled inflation concerns. Despite this, traders have now priced in 74.5 basis points of Fed rate cuts for 2025, slightly down from 81 basis points a day ago.
GBP/USD price analysis (Jan 2025 - Mar 2025) Source: TradingView,
Bank of England Holds Steady, Limiting Rate-Cut Bets
The pound sterling benefited from expectations that the Bank of England (BoE) will maintain a cautious approach to rate cuts, contrasting with the Fed's dovish shift. Several BoE officials, including Deputy Governor Megan Greene and Chief Economist Huw Pill, suggested that inflation risks remain elevated, which could limit the pace of rate reductions.
Market expectations for BoE rate cuts in 2025 have now been reduced to 52 basis points, providing further support for GBP. Additionally, the UK’s lower exposure to U.S. tariffs has strengthened investor confidence in the Pound. President Donald Trump hinted at a potential U.S.-UK trade deal, which could exempt the UK from impending tariff hikes on other nations.
Technical Outlook: GBP/USD Targets 1.30 Resistance
From a technical perspective, GBP/USD has shifted to an upward bias, clearing the 200-day Simple Moving Average (SMA) at 1.2786. A daily close above this level could confirm bullish momentum, paving the way for a test of the 1.3000 resistance zone. Failure to hold above 1.2786 may push the pair toward 1.2700, with further support at 1.2620.
As previously discussed traders focus on U.S. labor market data and Fed rate expectations, GBP/USD remains poised for further upside, especially if additional weak U.S. economic indicators reinforce the case for rate cuts.
