GBP/USD price forecast: Pound holds above $1.29 amid U.S. economic concerns
GBP/USD price forecast: Pound gains amid U.S. economic concerns
The pound sterling (GBP) continues to trade above 1.29 against the U.S. dollar (USD) as market concerns over the U.S. economic outlook persist. Investors remain cautious as President Donald Trump’s trade policies are expected to bring short-term turbulence, weakening the dollar’s strength.
The U.S. dollar index (DXY) remains near a four-month low at 103.50, reflecting market uncertainty about the economic impact of Trump's "America First" policies. Investors now anticipate that the Federal Reserve (Fed) will cut interest rates in June, with the CME FedWatch tool pricing in an 82% probability of a rate cut, up from 54% last month.
Additionally, Goldman Sachs revised down its Q4 2025 U.S. GDP forecast from 2.2% to 1.7%, citing the growing risk of an economic slowdown. Meanwhile, Trump's tariff policies continue to add pressure, with his 25% tariffs on Canada and Mexico remaining in focus.
GBP/USD price dynamics (June 2024 - March 2025) Source: TradingView.
GBP/USD price forecast: Can the pound sustain gains above 1.2900?
Despite global economic volatility, the Bank of England (BoE) remains cautious about aggressive monetary policy easing. While some BoE members favor a gradual approach to rate cuts, MPC member Catherine Mann has opposed a slow easing cycle, citing global market risks.
From a technical analysis perspective, GBP/USD is approaching the 61.8% Fibonacci retracement level at 1.2930. A break above this level could lead to a rally toward 1.3000, while support remains near 1.2767 and 1.2608. The 14-day Relative Strength Index (RSI) above 70 suggests strong bullish momentum, reinforcing a potential breakout.
As previously mentioned, GBP/USD has been holding steady between 1.2850 and 1.2930, with traders closely monitoring economic data for further direction. A sustained break above 1.2930 could push the pair higher, while a decline below 1.2767 may lead to a short-term pullback.
