Analysis of the GBP/USD Pair

GBP/USD from an Economic Perspective

The resilience of the British pound is facing a real test as the UK budget announcement approaches, as the government’s approach to curbing spending may come at the expense of slower economic growth.

Signs of caution are beginning to emerge in the options market, suggesting that the British pound may struggle to surpass its recent highs following the budget announcement.

The British currency has drawn support from the resilience of the UK economy, which has exceeded expectations, while monthly figures have pointed to steady economic growth.

On the U.S. economic front, we await today’s interest rate decision from the Federal Reserve, with expectations that rates will remain steady at 4%.

Pound/Dollar from a Technical Perspective

The GBP/USD pair retreated today near the 1.3275 level, which is considered a strong support level as the pair approaches a retest of the broken downtrend line, a positive divergence is visible on the 4-hour MACD indicator.

We are targeting 1.3350 as the first target, followed by 1.3470 as the second target.

This scenario would fail if the pair breaks below 1.3140.