GBP/USD Holds $1.3244 as BoE Eyes 3 Cuts—Breakout Soon?

The pound (GBP/USD) is under pressure in early Asian trade, down to $1.3289 against the dollar (USD). This comes as USD demand picks up on hopes of a US-UK trade deal. UK Finance Minister Rachel Reeves says she’s optimistic and is meeting US Treasury Secretary Scott Bessent later today to soften the impact of import tariffs on British exports like cars and steel.

While that trade optimism has boosted the dollar, it’s weighing on the pound in the short-term. GBP bulls now await the UK’s March retail sales. Markets expect a -0.3% month-on-month decline, a slowdown from February’s 1% gain. A surprise to the upside could help.

BoE Rate Cuts Add Pressure

Beyond trade, monetary policy is in focus. The IMF now expects three BoE rate cuts in 2025. That’s a big change from earlier expectations and reflects a gloomy economic forecast, with GDP growth downgraded to 1.1% from 1.6%.

For FX markets, that means a dovish backdrop for the pound. Traders are pricing in rate cuts and with that, tepid growth could cap any rallies from here.

Key macro themes to watch:

• BoE Rate Cut Odds: 3 cuts priced in for 2025

• UK GDP Forecast: 1.1%, down from 1.6%

• Retail Sales (Mar): Expected -0.3% MoM

• US-UK Trade Talks: Reeves-Bessent meeting today

GBP/USD Technical Setup: Triangle in Focus

On the charts, GBP/USD is in a triangle, with price above $1.3244—the lower trendline and support. The 50-period EMA at $1.3303 is capping the upside. Momentum indicators like the MACD have flattened, indicating indecision.

This type of setup often precedes a big move. If bulls hold $1.3244 and a bullish candle forms, we could see a move to $1.3347 and possibly $1.3386. But if support breaks, targets are $1.3202 and $1.3165.

Trade Setup:

• Buy: Bounce from $1.3244

• Sell: Break $1.3244 with volume

• Targets: $1.3347, $1.3386

• Targets: $1.3202, $1.3165

• Stop Loss (Longs): $1.3202

Wait for price to tell you what to do. Retail data and trade headlines coming up.