GBP/USD steadies ahead of back-to-back Fed and BoE decisions

The Pound Sterling edged higher for a second session as traders brace for Wednesday's Fed hold and Thursday's BoE rate decision.

The Fed is expected to hold rates at 3.50% to 3.75% on Wednesday as the Iran conflict clouds the rate outlook.

The BoE is widely expected to hold at 3.75% on Thursday in a 7-2 vote after the Iran-driven energy shock slashed March rate cut odds.

GBP/USD rose about 0.3% on Tuesday, gaining ground for a second consecutive session and trading around 1.3360. The pair has found a floor between 1.3250 and 1.3300 after sliding to a three-month low close to 1.3220 late last week, though it remains below both its key daily moving averages. The two-day bounce has produced a pair of modestly bullish candles, but price is still well within the broader sell-off from the late-January high near 1.3870.

Wednesday brings the Federal Reserve's (Fed) March decision, where the central bank is all but certain to keep interest rates on hold. The focus falls squarely on the updated Summary of Economic Projections (SEP) and dot plot, with the Iran conflict and surging energy prices complicating the current path toward further rate cuts. Futures pricing has shifted sharply since the war began, with traders now expecting only one cut this year, likely in December, compared with two or three before the conflict escalated. Chair Jerome Powell's press conference, one of his last before stepping down in May, will be watched for any signal on how the Federal Open Market Committee (FOMC) is weighing the oil shock against a softening labour market.

Thursday is equally consequential for the Pound. UK employment data lands first, with the ILO unemployment rate forecast to tick higher to 5.3% from 5.2% and average earnings expected to cool to 3.9% from 4.2%. The Bank of England (BoE) rate decision follows at noon, where the Monetary Policy Committee (MPC) is expected to hold at 3.75% in a 7-2 vote. Just weeks ago, markets priced an 80% chance of a March cut; the Iran-driven energy shock has reversed that entirely. The vote split will be closely watched, with a 6-3 outcome signalling more dovish pressure than the consensus 7-2.

GBP/USD daily chart

Technical Analysis

In the daily chart, GBP/USD trades at 1.3361. The pair holds just above the 200-day exponential moving average near 1.3375, while price remains capped well below the 50-day EMA around 1.3460, keeping the near-term tone mildly bearish within a broader range. The recent sequence of lower closes from the mid-1.36s toward the low 1.33s confirms selling pressure, though the Stochastic oscillator stabilising in the high-20s suggests downside momentum is losing force rather than accelerating.

Immediate resistance emerges at the 1.3400/1.3420 area, with a break above exposing the 1.3460 region around the 50-day EMA. A daily close above that latter barrier would be needed to ease the downside bias and open the way toward 1.3550. On the downside, initial support stands at the recent 1.3220 low, followed by the 1.3150 area if sellers regain control. A sustained move below 1.3220 would confirm a continuation of the bearish phase toward progressively lower levels.

(The technical analysis of this story was written with the help of an AI tool.)