GBP/USD Price Forecast - Pound Near 1.3450: Can the Pound Extend Its 8% 2025 Surge Above 1.3535?

GBP/USD: Late-Year Pullback Tests 1.3450 Support Inside a Still-Bullish 2025 Trend

Where GBP/USD sits now and why 1.3450–1.3535 matters

GBP/USD is trading around 1.3450–1.3460 after failing again at the 1.3534–1.3535 resistance zone. That level is the three-month high and the top of the current ascending channel. The pair is now sitting just under the nine-day EMA at 1.3462 but still well above the 50-day EMA near 1.3351 and above the rising channel support. Technically, this is a classic late-trend pause: a shallow pullback inside a bullish structure, not a confirmed top. As long as spot holds above 1.3350 and stays within the channel, the bias remains for another attempt at 1.3535 and a potential extension toward 1.3600.

2025 performance: 8% GBP/USD gain and a failed dollar comeback

Over the full year, GBP/USD gained roughly 8%, moving from the low-1.24s area to settle close to 1.35. At one point in the first half of 2025, the pair traded as high as 1.38, its strongest level in more than three years, before the dollar stabilized and capped further upside. The move was not just a sterling story; the broad US dollar index dropped about 9% in 2025, its sharpest annual decline since 2017. That composite picture matters: even after the recent dip back to 1.3450, cable is finishing the year firmly in the upper half of its 2025 range, with the uptrend still intact, but without the momentum it showed above 1.37.

Fed cuts, Trump pressure and why the dollar stopped leading

US monetary policy was a key driver for GBP/USD throughout the year. The Federal Reserve kept the funds rate at 4.50% for the first eight months, then delivered three cuts between September and December, taking the target band down to 3.75%. Those 75 basis points of easing, combined with the market’s expectation of more cuts under a Trump administration, were central to the dollar’s 9% slide. Political pressure amplified that vulnerability: the US president repeatedly attacked the Fed Chair for not cutting faster and pushed openly for a more dovish leadership. After Governor Kugler resigned and Miran joined the FOMC pushing for deeper cuts, markets started to price a structurally softer policy path. A new Fed Chair is due to take over in May, and investors expect that person to lean dovish, which keeps medium-term dollar risk tilted lower even if the near-term repricing has paused.

Macro backdrop in the US: growth resilient, inflation cooling, but policy optics shaky

The latest US macro data gives USD a mixed profile rather than a clear edge. On one side, GDP expanded by 4.3% in the latest reported quarter, clearly stronger than earlier expectations and supportive for the dollar on growth differentials. The housing data showed the house price index up 1.3% month-on-month in October after 1.4% previously, and 1.7% on the year, consistent with a firm but not overheating property market as mortgage rates drift lower. At the same time, both headline and core CPI dropped sharply in November, confirming that the Fed’s past tightening plus base effects are finally biting. The net effect for GBP/USD: US growth is not collapsing, but the inflation trend allows, and political pressure almost demands, further cuts in 2026. That combination caps the upside for the dollar on rallies and supports the idea that any sustained leg lower in cable will need either a UK-specific shock or a global risk-off wave.

BoE policy, UK fiscal risk and why sterling is not a one-way bet

On the UK side, the Bank of England cut rates four times in 2025 as it became more confident that domestic inflation pressures were easing. Even so, there were visible splits on the committee, with hawkish members still worried about persistent core inflation. Markets are currently expecting two more BoE cuts next year, which keeps a lid on GBP yield advantage. At the fiscal level, fears around UK public finances never completely disappeared. Concerns about further tax hikes in the Autumn 2025 budget and their drag on growth weighed on sterling at times, especially when gilt yields spiked and memories of 2022 resurfaced. The difference versus 2022 is size and control: there was no new “mini-budget panic,” no disorderly collapse in UK bonds, and no forced BoE rescue. Short positioning that built up on those fears was partially covered into year-end, helping GBP/USD recover back toward 1.35. Overall, sterling is not “safe haven” currency, but it is no longer priced for disaster either.

Year review: from 1.38 peak to 1.35 consolidation in GBP/USD

The trajectory of GBP/USD across 2025 is important for framing the current zone. In the first half, the pair rallied to around 1.38 as US tariffs and Fed policy uncertainty hurt the dollar, and as markets anticipated a cleaner UK disinflation story. In the second half, the Fed began cutting, but broad risk sentiment became more cautious, UK growth worries resurfaced, and sterling could not take out the 1.38–1.40 band. Instead, the pair drifted lower and spent the final months oscillating between roughly 1.3350 and 1.3535, with the 1.3450–1.3460 region acting as a pivot. Ending the year around 1.35 after an 8% gain is strong, but the failure to hold near 1.38 confirms that buyers are no longer in full control and that fresh catalysts are needed for a break toward 1.40.

Short-term technicals: EMAs, RSI and the 1.3351 safety net

On the daily chart, GBP/USD is still in an uptrend but momentum has cooled. Price is marginally below the nine-day EMA at 1.3462, signaling a short-term loss of impulse, yet it remains clearly above the 50-day EMA around 1.3351. The slope of that 50-day EMA is still upward, and spot is trading along a rising channel, which means the dominant trend on the short-to-medium horizon is bullish. The 14-day RSI around 61 underlines this: the oscillator is positive, not overbought, and nowhere near capitulation levels. That configuration typically signals a bullish trend that is pausing, not reversing. From a pure trend-following perspective, the line in the sand is simple: above 1.3350, dips are noise in a rising market; below 1.3350 and the probability of a deeper correction toward 1.3010 rises sharply.

Near-term levels: 1.3534–1.3535 resistance and 1.3350–1.3351 support

The near-term map for GBP/USD is well defined. On the upside, the first key level is the three-month high region at 1.3534–1.3535. A daily close above that band would confirm that the latest pullback was just a minor correction and would reopen 1.3600 as the next psychological target, followed by the top of the current ascending channel near 1.3690. On the downside, the first area to watch is the support band around the 50-day EMA at 1.3351. A clean daily break below both 1.3351 and the channel support would signal that the uptrend is no longer in control and expose the broader support zone around 1.3010, the eight-month low. In other words, 1.3535 is the trigger for another extension of the 2025 bull leg, while 1.3350 is the point where the market starts to price a more serious reversal.

Intraday vs swing setup: how to use 1.3400, 1.3535 and 1.3600

From a trading perspective, the structure of GBP/USD supports a bullish bias above the 50-day EMA but calls for precise risk control. One tactical approach is to treat the 1.3400 area as the invalidation zone for short-term longs: buying dips near or just above that level, targeting 1.3535, with a stop below 1.3400, matches the typical 1–2 day horizon many signals providers are using. If price convincingly clears 1.3535, the next objective becomes 1.3600, where profit-taking is rational, given year-end thin liquidity and the broader macro uncertainties around Fed leadership and UK fiscal policy. For intraday traders, the nine-day EMA at 1.3462 provides a quick reference: regaining and holding above that short-term average confirms that buyers are stepping back in; repeated failures there argue for patience and wider stops.

Rate differentials and 2026 GBP/USD expectations

Looking into 2026, the rate story remains central for GBP/USD. Consensus expectations suggest only a marginal move higher in the pair to around 1.36 by the end of next year, reflecting fragility on both sides of the cross. Nordea and others see the dollar weakening further as US growth differentials fade and political risk increases under a more interventionist administration; they specifically highlight concern about attempts to influence the Fed. At the same time, the UK is not immune to its own structural issues: lower trend growth, high debt, and the likelihood of further tax measures all limit the upside potential for sterling. The realistic base case is not a one-way cable melt-up, but a broad 1.30–1.40 range with an upward tilt as long as the Fed remains on a gentler path than the BoE and as long as there is no UK-specific policy shock.

Final stance on GBP/USD: bullish bias, but only above 1.3350

Taking all the numbers together, GBP/USD still earns a bullish label, but with strict conditions. The pair is up about 8% on the year, the dollar index has dropped roughly 9%, the Fed has cut rates from 4.50% to 3.75% with more easing likely under a politically pressured central bank, and the BoE has already used four cuts but still runs higher real rates with visible internal hawks. Technically, price holds above the 50-day EMA at 1.3351, trades inside a rising channel, and carries a positive 14-day RSI near 61. The key resistance at 1.3534–1.3535 defines the short-term upside trigger; the 1.3350–1.3351 support band defines where the bullish thesis breaks. Above 1.3350, the risk-reward still favors buying dips with 1.3535, 1.3600 and 1.3690 as staged targets. A decisive daily close below 1.3350 flips the bias to bearish and opens 1.3010 as the next logical destination, at which point any “buy” stance is no longer justified.

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