GBP/USD price holds above $1.33 ahead of BoE rate cut and Fed decision
The British pound held firm near $1.3323 in Tuesday’s session, buoyed by broader dollar softness and improving sentiment around global trade negotiations. The Bank of England is widely expected to cut rates by 25 basis points to 4.25% on Thursday, but GBP/USD remains supported, with investors anticipating that Governor Andrew Bailey may also adjust the central bank’s guidance to reflect escalating trade-related risks.
This would mark the fourth cut in the BoE’s current easing cycle, which began in August 2024. However, traders are particularly focused on whether the central bank will walk back its previous "gradual" policy stance. Analysts at Commonwealth Bank of Australia suggest that the BoE may revise its GDP forecasts downward, citing economic headwinds tied to U.S. tariffs.
On the U.S. side, the Federal Reserve is expected to leave interest rates unchanged at 4.25%–4.50% for a third consecutive meeting. While Fed officials continue to favor a “wait-and-see” approach, growing concerns around stagflation and weak growth have weighed on the greenback. Markets are also digesting comments from U.S. Treasury Secretary Scott Bessent, who remains optimistic that Washington could finalize multiple trade deals this week, including “substantial progress” with China.
GBP/USD price dynamics (May 2025) Source: TradingView.
Technicals show momentum above key support
GBP/USD has now regained the 1.33 handle and is eyeing resistance near the April high of 1.3445. The pair trades above all short-to-long EMAs on the daily chart, with the 14-day RSI just below the 60 mark—a level that, if breached, could confirm renewed upside momentum. Immediate support lies around 1.32, the April 3 high and prior breakout zone.
The near-term trend remains bullish as long as GBP/USD holds above 1.32, with potential for a retest of the 1.3445 level if the BoE delivers a rate cut without aggressive forward guidance. Should the Fed adopt a more hawkish tone than expected, a retracement toward 1.3250 cannot be ruled out.
As previously discussed in our recent GBP/USD outlook, Sterling's resilience hinges on central bank tone and the global trade backdrop. With key events unfolding midweek, volatility is expected to rise. Traders should monitor any shift in BoE policy language and clarity from the Fed on its rate trajectory.
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