Fed outlook and cautious markets keep Pound Sterling vs Dollar trading rangebound with limited upside

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Pound Sterling gains 0.50% today

Highlights

10-year U.S. Treasury yields edged lower as investors monitor Middle East conflict resolutions and the Fed's policy outlook.
Fed Chair Powell reiterated inflation expectations remain contained, and money markets now anticipate no further rate cuts this year.
GBP/USD remains under medium and long-term selling pressure, with a likely trading range of $1.3200–$1.3380 and downside favored barring a break above immediate resistance.

Fed rate outlook shifts as inflation views and Middle East conflict weigh

On Tuesday, the yield on the 10-year U.S. Treasury edged lower as investors evaluated the prospects of a resolution to the ongoing conflict in the Middle East and assessed the Federal Reserve's interest rate trajectory. Federal Reserve Chair Jerome Powell has stated this week that inflation expectations remain anchored despite rising energy prices, suggesting that the central bank does not currently need to raise interest rates. Money markets are now pricing in no further Federal Reserve rate cuts for the remainder of the year, according to the CME's FedWatch tool.

Resistance at $1.3313 as weak bullish signals vie with sell bias

Momentum signals on D1 remain weak, with both MACD and ADX indicating limited bullish strength and a prevailing sell bias. RSI and CCI suggest slightly oversold conditions, while Stoch RSI signals a strong buy, highlighting some short-term upward momentum; however, this contrasts with BBP, which remains in "sell" territory and signals continued seller dominance intraday. The Ichimoku Kijun level at $1.3313 now serves as immediate resistance above the last trade, as the current price tests the upper range boundary and volatility stays moderate.

Sideways price seen as low upside odds drive consolidation scenario

For the next five trading days, GBP/USD is expected to fluctuate within a $1.3200–$1.3380 volatility band relative to current levels, with price direction likely to remain sideways. The probability of a sustained price increase is very low (less than 20%), favoring a downward move if selling momentum intensifies. Baseline expectations call for ongoing consolidation unless the pair either breaks above the $1.3313 resistance or retreats below $1.3200 support.

Viktoras Karapetjanc, expert at Traders Union, views GBP/USD as trapped within a consolidating range, with macro sentiment cautious after the Fed’s dovish stance and easing Treasury yields. He sees seller pressure dominating due to weak momentum, but highlights that oversold signals and moderate volatility keep short-term rebounds possible. The analyst remains constructive as long as support at $1.3200 holds, and notes market optimism could improve if resistance at $1.3313 breaks. "Short-term dips may still attract buyers, and sustained consolidation favors disciplined, positive positioning," says Karapetjanc.

Earlier, analysts noted that GBP/USD was under persistent downside pressure as technical indicators broadly reinforced a bearish bias. The latest price action, juxtaposed with mixed momentum signals and unchanged central bank outlooks, underscores that the pair remains vulnerable to further selling if resistance at $1.3313 continues to cap advances.

Source of Data: GBP Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.