Bias: bearish-to-range-bound, the pair sits below its 90-day average and in the lower half of the 3-month range, suggesting limited upside near term.
Key drivers:
- Rate gap: the US Federal Reserve is expected to ease policy gradually this year, while the Bank of England has signaled a slower but steady easing path, narrowing the policy gap for now in markets today.
- Macro factor: inflation is expected to decline toward the BoE’s 2% target by late 2026.
- Global risk appetite: geopolitical tensions and cautious market mood keep broad FX moves modest, limiting upside for GBP.
Range: USD/GBP is likely to drift within its recent 3-month range, with only limited breaks unless new US data delivers a clear surprise, keeping traders cautious around the lower half.
What could change it:
- Upside risk: softer US data or a dovish Fed tone could lift the pound and push the pair higher.
- Downside risk: stronger US payrolls or a hawkish Fed shift could strengthen the dollar and weigh on GBP.
