GBP/USD Price Forecast: Holds bullish bias near 1.3400 ahead of Wednesday’s BoE decision

• Prospects for diplomacy over Iran weigh on the safe-haven USD, allowing GBP/USD to make modest gains on Monday.
• Expectations of a BoE rate rise lend further backing to the GBP and spot prices before the central bank’s key decision.
• With the technical picture remaining favourable, the balance of risks continues to point upwards.

The 1.3400 level comes back into reach for GBP/USD during the Asian session as buyers step in on dips at the start of the week. The recovery interrupts a modest retreat from Friday’s peak, the pair’s highest since 16 September.

Renewed hopes of a diplomatic breakthrough that could bring the US-Iran war to an end are weighing on the safe-haven US Dollar (USD). By contrast, expectations that the Bank of England (BoE) will tighten monetary policy continue to underpin the British Pound (GBP), lending support to GBP/USD. Buyers nevertheless appear reluctant to take sizeable positions before this week’s key central bank decision and important US economic releases.

A 25 basis point (bps) interest rate increase is widely anticipated when the BoE delivers its policy decision on Wednesday. The US data calendar, meanwhile, begins with the ISM Manufacturing PMI later today. The ISM Services PMI follows on Wednesday, ahead of Friday’s closely watched Nonfarm Payrolls (NFP) report. Developments in the Middle East crisis could also shape the USD’s direction and give GBP/USD fresh impetus.

Holding above the 100-day Simple Moving Average (SMA) at 1.3387 leaves spot prices with a modest bullish bias as they test a cluster of Fibonacci resistance just above. Momentum also remains supportive: the Relative Strength Index (RSI) is near 57, while positive readings on the Moving Average Convergence Divergence (MACD) indicator reflect a favourable picture above zero. Together, these signals support the argument for further GBP/USD gains.

The first obstacle to an advance is the 50.0% retracement at 1.3407. Should buyers sustain the rise, the next targets are resistance at the 61.8% level of 1.3471 and the 78.6% retracement of 1.3561. In the other direction, the 100-day SMA at 1.3387 offers initial support ahead of the 38.2% Fibonacci retracement at 1.3344. A more pronounced decline would bring the 23.6% level at 1.3265 into view, followed by the structural Fibonacci anchor near 1.3138.

A decisive daily close above 1.3407 is required to pave the way for a stronger rise towards 1.3471 and 1.3561. Until then, GBP/USD would maintain a positive near-term outlook provided it stays above the 100-day SMA and the underlying retracement support levels.

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

GBP/USD holds a positive bias on the daily chart