GBP/USD Price Analysis – March 26, 2025
Daily Price Outlook
During the European trading session, the GBP/USD currency pair extended its losing streak, trading around 1.2908 and hitting an intra-day low of 1.2887.
The British Pound faced significant selling pressure following the release of the UK Consumer Price Index (CPI) report for February, which indicated a faster-than-expected decline in inflation.
On the data front, the headline CPI increased 2.8% year-over-year (YoY), falling short of market expectations of 2.9% and down from January’s 3.0% increase.
Core CPI, which excludes volatile items, rose by 3.5%, missing forecasts of 3.6% and declining from the previous release of 3.7%. On a monthly basis, headline CPI grew 0.4% after a -0.1% reading in January, falling short of the 0.5% estimate.
Therefore, the Bank of England (BoE) closely monitors UK service inflation, which remained steady at 5%. While the softer inflation figures reinforced market expectations for a BoE rate cut, sticky services inflation may prevent traders from fully pricing in a rate cut as soon as May.
UK Fiscal Policy and Political Developments Add to Pound Weakness
Moreover, market participants are preparing for more volatility in the British Pound as UK Chancellor Rachel Reeves is set to deliver the Spring Statement at 12:30 GMT.
She is expected to announce cuts in welfare spending and stick to her stance of not raising taxes. Instead, she plans to rely on foreign financing for funding investments.
In addition, Reeves is likely to reveal a £2.2 billion increase in defense spending, partly due to the ongoing geopolitical uncertainty caused by the Ukraine war, as reported by BBC News.
Therefore, the prospect of reduced fiscal spending could weigh on the Pound, as lower government expenditure may slow economic growth and keep inflation pressures subdued, reinforcing expectations of BoE monetary easing.
US Dollar Steadies Ahead of Key Inflation Data
Meanwhile, the GBP/USD pair faced additional downward pressure as the US Dollar stabilized despite uncertainty over potential tariffs by former President Donald Trump, set to be announced on April 2. The US Dollar Index (DXY) edged higher to 104.40, reflecting cautious sentiment in global markets.
Trump has reiterated his threats to impose tariffs but suggested that several countries may receive exemptions.
While traders speculate on the potential impact on US economic growth, the move could lead to renewed inflationary pressures, complicating the Federal Reserve’s policy outlook.
Looking ahead, investors focus on the US Personal Consumption Expenditures (PCE) Price Index for February, scheduled for release on Friday.
Meanwhile, the Fed’s preferred inflation measure, the core PCE index, is expected to rise 2.7% year-over-year, slightly above the previous reading of 2.6%.
According to the CME FedWatch tool, the Fed is widely expected to maintain its current interest rate range of 4.25%-4.50% in May, but markets are pricing in a 65% probability of a rate cut in June.
Therefore, the combination of softer UK inflation, cautious fiscal policy expectations, and steady US dollar performance is likely to keep GBP/USD under pressure in the near term as traders assess the BoE and Fed’s monetary policy paths.
GBP/USD – Technical Analysis
The GBP/USD pair is trading at $1.29359, registering a modest gain of +0.04%, as the pound holds steady above its pivot point at $1.29271. Price action remains constructive on the 4-hour chart, supported by an upward bias as long as it stays above the pivot.
The pair is testing the 50-period EMA at $1.29408, which now serves as an immediate technical barrier. A confirmed break above this level would reinforce short-term bullish momentum.
Immediate resistance is located at $1.29740, with the next upside targets at $1.30138 and $1.30457. A move beyond these levels could open the door for further gains, particularly if upcoming U.S. data pressures the dollar.
On the downside, initial support lies at $1.28879, followed by $1.28616 and $1.28212, where buyers may reemerge if the pair retraces.
From a technical standpoint, the pair is positioned for further upside as long as it holds above $1.29277, which coincides with the pivot and is near the current trading range.
The recommended strategy favors a buy-on-break above this level, with a take-profit target set at $1.29880, while a stop-loss is advised at $1.28996 to mitigate risk.
Related News
- GOLD Price Analysis – March 26, 2025
JOIN LHFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.