GBP/USD price forecast: Pound struggles below $1.295 as traders await U.S. PPI and UK GDP
GBP/USD consolidates near $1.29, awaiting key UK and U.S. economic data for further direction
The GBP/USD pair slipped to 1.2925 on Wednesday, reflecting a 0.13% decline, as traders digested the latest U.S. Consumer Price Index (CPI) report. The data revealed that headline inflation cooled to 2.8% YoY, while core CPI dipped to 3.1%, reinforcing expectations that the Federal Reserve (Fed) may cut rates later this year.
Despite the softer inflation data, fears of price acceleration persist due to 25% U.S. tariffs on aluminum and steel, which could impact supply chains and costs. Meanwhile, traders remain cautious ahead of the Producer Price Index (PPI) report on Thursday and UK GDP data on Friday, both of which could influence market sentiment.
GBP/USD price dynamics (Jan 2025 - Mar 2025) Source: TradingView.
Support and Resistance Levels for GBP/USD
Technical indicators suggest that GBP/USD is still in an uptrend, despite Wednesday’s minor pullback. Immediate support is at 1.2900, with further downside potential toward the 200-day Simple Moving Average (SMA) at 1.2790 if selling pressure increases. On the upside, resistance is at 1.2950, followed by the key 1.3000 psychological level. A breakout above this zone could push GBP/USD toward November’s high of 1.3047.
Scotiabank’s analysis highlights that short-term trend momentum remains bullish, with the pair consolidating near Fibonacci retracement resistance in the low 1.29 zone. As long as support at 1.2875 - 1.2880 holds, the pound may continue its gradual ascent.
Market Outlook: UK GDP and Fed Policy in Focus
The next key drivers for GBP/USD will be the UK GDP data on Friday and potential shifts in BoE and Fed policy expectations. The Office for Budget Responsibility’s economic forecast on March 26 will also be closely watched, as it could influence investor sentiment regarding the UK's growth trajectory.
As previously discussed, the GBP/USD uptrend remains intact, but further gains depend on UK economic data and Fed policy signals. If UK GDP surprises to the upside, the pound could strengthen further, while a disappointing print may lead to renewed selling pressure.
