continues to rise on Wednesday, reaching 1.3516.
Following recent comments from Bank of England Governor Andrew Bailey, investors are seeking further clarification on his decision to leave the rate unchanged at the last meeting. The Monetary Policy Committee left the rate unchanged, with a narrow margin.
The market expects two rate cuts in 2026, which will take the rate to 3.25%. However, the timing of the easing remains uncertain. If Bailey signals the possibility of a cut as early as March, the market could start pricing in more than 50 basis points of easing this year.
An additional source of pressure comes from US President Donald Trump's trade policy. The basic tariff of 10% has already come into force. However, it is not yet clear when an increase to 15% could be introduced.
Attention is also focused on the by-elections in the Gorton and Denton constituencies in Manchester, which are seen as a major test for Prime Minister Keir.
Starmer and the Labor Party. Political uncertainty adds to the volatility of the pound.
Technical analysis
On the GBP/USD chart for the last quarter hour, the market is forming a wide consolidation range around the 1.3500 level. Today an expansion towards 1.3560 is possible. Subsequently, a correction towards 1.3494 could occur. After completing this correction, a new consolidation range is likely to form. If it breaks higher, the next target would be 1.3622. If it breaks down, the next target may be 1.3383. Technically, this scenario is confirmed by the MACD indicator. Its signal line is below the zero level and points up.
According to the GBP/USD H1 chart, the market formed a compact consolidation range around 1.3500 and, after a bullish breakout, is developing a wave structure towards 1.3560. Subsequently, a downward movement towards 1.3500 cannot be ruled out. Technically, this scenario is confirmed by the stochastic oscillator. Its signal line is above the 50 level and pointing upwards.
Conclusion
In summary, GBP/USD extends its recovery for the fourth consecutive session as markets await clearer signals from Bank of England Governor Bailey on the timing of potential rate cuts. Although the base case foresees two reductions this year, any moderate surprise could trigger further price revisions.
Technically, the pair is gaining momentum within a wide consolidation range, with short-term resistance at 1.3560 and support at 1.3494. A sustained break above 1.3560 would open the door to 1.3622, while a failure could lead to a retest of the lower range levels. Political uncertainty stemming from the upcoming midterms and ongoing US trade policy risks add further volatility. The short-term bias remains cautiously bullish, but the direction will depend on Bailey's tone and market interpretation.
By RoboForex Analysis Department
Disclaimer
Any forecast contained herein is based on the author's personal opinion. This analysis cannot be considered trading advice. RoboForex assumes no responsibility for trading results based on the trading recommendations and reviews contained herein.
