GBP/USD price forecast: Pound sterling surges past $1.30 ahead of BoE rate decision
Pound sterling breaks $1.30 amid BoE rate expectations
The British pound extended gains above $1.30 early morning, reaching its highest level in over four months, as traders anticipate that the Bank of England (BoE) will keep interest rates higher for longer. The BoE is expected to hold its benchmark rate at 4.5% this Thursday, with markets pricing in a slower pace of cuts compared to the Federal Reserve, which is expected to reduce rates by 60 basis points by year-end.
Despite recent data showing a 0.1% contraction in the UK economy, the pound remains firm on expectations of planned infrastructure investments that could support economic growth. Meanwhile, the OECD downgraded the UK's growth outlook to 1.4% from 1.7%, citing global trade tensions and President Donald Trump’s tariff policies as key risks.
GBP/USD price forecast (February 2025 - March 2025) Source: TradingView.
Technical outlook: GBP/USD holds near key levels
The GBP/USD pair continues to hold strong around 1.2970 mark, finding solid support at the 61.8% Fibonacci retracement level of 1.2930. The 14-day RSI at 60 indicates strong bullish momentum, reinforcing the pair’s upward trend as it remains well above the 200-day EMA, which sits at 1.27.
On the upside, the key resistance level stands at 1.31, which aligns with the October 15 high. A decisive break above this level could drive the pound toward 1.32, signaling further strength. Conversely, failure to maintain support at 1.2930 may lead to a pullback, with the next downside targets at 1.2767, corresponding to the 50% Fibonacci retracement level, and 1.2608, the 38.2% Fibonacci level.
As previously discussed, the pound's rally aligns with previous expectations of limited BoE rate cuts, supporting GBP/USD near 1.3000. However, traders should watch for monetary policy guidance and labor market data to gauge further direction.
