GBP/USD Forecast: Markets Pivot from Tariffs to Monetary Policy

• The GBP/USD forecast indicates a rebound in the dollar.

• Fed policymakers voted to keep interest rates unchanged.

• The Bank of England held rates on Thursday and shifted to a cautious tone.

The GBP/USD forecast indicates a rebound in the dollar amid a brief shift in focus from tariffs to monetary policy. Market participants expect both the Fed and the Bank of England to move forward cautiously due to uncertainty regarding US trade policies.

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The dollar found its feet late Wednesday after the FOMC policy meeting. Policymakers voted to keep interest rates unchanged. Moreover, the central bank’s forecasts remained unchanged, projecting only two rate cuts this year. Recent data had pushed up rate cut expectations, with traders pricing in three moves this year.

However, the Fed has to monitor both growth and inflation. While growth has slowed, inflation expectations have risen due to tariffs. At the same time, there is uncertainty about what Trump will do in the future. As a result, the Fed maintained that there was no rush to cut interest rates, giving life to the dollar. However, this rebound might only be brief. US recession fears will remain as long as tariffs cause trade wars. 

Similarly, the Bank of England held rates on Thursday and shifted to a cautious tone. Traders had expected seven votes to hold rates. However, eight policymakers voted to keep rates unchanged, leading to a decline in rate cut expectations. 

GBP/USD key events today

Market participants do not expect any high-impact reports today. Therefore, the price might consolidate.

GBP/USD technical forecast: Bears take charge after RSI divergence

On the technical side, the GBP/USD price has broken below the 30-SMA, indicating a shift in sentiment. Previously, the price was in an uptrend, trading above the 30-SMA. However, it paused near the pivotal 1.3000 level and started showing signs of weakness. The price stopped making big swings above the 30-SMA, indicating indecision. 

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At the same time, the RSI made a bearish divergence, indicating fading bullish momentum. As a result, bears overpowered bulls and pushed the price below the 30-SMA. Meanwhile, the RSI broke below 50, indicating stronger bearish momentum. 

GBP/USD can now retest the 1.2851 support level. This level coincides with the 0.382 Fib retracement, creating a solid resistance. A pause here would allow bulls to take back control. On the other hand, a break below this zone would confirm a new downtrend.

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