Insights 
VT 
Key Points:
- GBP/USD dipped to 1.33516, down 0.1%, but eyes a return to $1.3445 amid improving trade sentiment.
- Market may be overpricing BoE rate cuts ahead of Thursday’s policy decision.
Sterling slipped slightly on Tuesday, with GBP/USD falling to 1.3352, but analysts at ING suggest that optimism surrounding UK trade developments and recalibrated rate expectations may support a near-term recovery. The pound’s modest retreat follows a recent high of 1.34027, and while the short-term momentum has cooled, the broader setup hints at bullish potential.
Market sentiment turned cautious ahead of the Bank of England’s rate decision on Thursday. While the BoE is widely expected to keep its key rate unchanged, traders have priced in as many as three cuts by year-end. ING’s Chris Turner argues that this may be overly aggressive, especially given resilient UK labour and wage data. Should the BoE issue a more hawkish statement or downgrade the likelihood of easing, sterling could rally back toward the $1.3445 level.
Adding to the bullish case, the UK announced a trade deal with India on Tuesday, and there is mounting speculation of a potential agreement with the United States in the coming days. These developments, alongside the scheduled May 19 UK-EU summit, are improving the post-Brexit political and economic climate, which could reduce structural pressure on the pound.
Technical Analysis
GBP/USD saw a strong rebound from the 1.3260 region on May 6th, forming a clean intraday uptrend that peaked at 1.3403 in early trading on the 7th. Price action has since moderated, consolidating in a narrow range between 1.3350 and 1.3380. Short-term moving averages (5/10/30) are flattening, suggesting waning bullish momentum, while the MACD histogram shows a mild bearish crossover and narrowing bars—indicative of stalling upside drive.
Picture: GBP/USD climbs from 1.3260 low, hits 1.3403 before consolidating, as seen on the VT Markets app
Despite this, the pair continues to hold above key support near 1.3333, preserving the potential for a fresh push higher if dollar softness resumes. Immediate resistance sits at 1.3380 and 1.3403, while support lies at 1.3330 and deeper at 1.3260 if sellers regain control.
Cautious Forecast
Sterling may continue to consolidate near 1.3350 ahead of the BoE decision, but renewed trade optimism and a hawkish hold could see GBP/USD retest the 1.3400–1.3445 zone this week. Any surprise dovish tilt from the BoE, however, could drag it back toward the 1.3300 threshold.
