The British pound remained firm against the US dollar on Wednesday, with GBP/USD holding above 1.2600, supported by technical buying near the nine-day EMA. Traders remain cautious as they weigh upcoming economic data and shifting monetary policy expectations from both the Federal Reserve and the Bank of England (BoE).
Despite recent fluctuations, sterling has shown resilience, benefiting from a softer US dollar as markets continue to adjust their expectations on Fed rate cuts. While the central bank has kept its stance data-dependent, recent signs of slowing US economic momentum have increased speculation of rate cuts later this year, keeping dollar bulls in check.
Meanwhile, the Bank of England’s policy outlook remains uncertain, with inflation in the UK still running above target. BoE officials have emphasized the need for patience before considering rate cuts, providing some underlying support for the pound. However, any signs of weakness in upcoming UK economic data, particularly in wage growth or employment, could shift expectations and put pressure on sterling.
GBP/USD 1-D Chart as of February 25, 2025 (Source: TradingView)
Technical indicators suggest that GBP/USD remains supported, with buyers stepping in around the 1.2600 level, in line with its nine-day EMA. A break above immediate resistance near 1.2650 could open the door for further upside, while a decline below 1.2580 might signal renewed selling pressure.
Broader market sentiment is also playing a role, with traders closely watching US inflation data and Federal Reserve commentary for further direction. If inflation cools faster than expected, the dollar could weaken further, boosting GBP/USD. Conversely, stronger US economic data could reinforce the Fed’s cautious approach, limiting the pound’s upside.
For now, GBP/USD remains in a consolidation phase, with traders looking for fresh catalysts from both UK and US economic developments. Until clearer signals emerge, the pair is likely to remain range-bound, with technical and fundamental factors driving short-term price action.
