Rate Hike Locked In! GBPUSD Set to Stabilize

Summary:

As elevated energy prices continue to stoke inflation concerns, the Bank of England (BoE) hinted earlier this month that a rate hike could come as early as April.

BUY GBPUSD

Close Time

CLOSED

1.32736

Entry Price

1.37000

1.32000

1.31979 +0.00152 +0.12%

73.6

Pips

Loss

1.32000

1.31997

Exit Price

1.32736

Entry Price

1.37000

Fundamentals

Money markets now expect the BoE to raise rates as many as three times this year, a sharp reversal from pre-conflict expectations of two rate cuts in 2026.

A closely watched monthly survey showed that British consumer confidence slipped to its lowest level in nearly a year in March, as households feared the war in Iran could hit the economy and drive a sharp rise in prices.

The GfK Consumer Confidence Index fell to -21 in March from -19 in February, its lowest reading since April 2025, although the decline was smaller than economists polled by Reuters had forecast. The index is the longest-running survey of its kind in the UK.

Global oil prices have surged 50% since the conflict erupted in late February, and many British households are already feeling the pinch from higher gasoline prices.

While the government has announced limited support for low-income households reliant on heating oil, most of the impact will only fully feed through in July, when the regulated household energy price cap takes effect.

The BoE forecasts inflation will rise to around 3.5% by mid-year. The OECD expects UK average inflation to reach 4% in 2026, an upward revision larger than that for most other economies.

Technical Analysis

On the daily timeframe for GBPUSD, Bollinger Bands are expanding downward and MAs are trending lower, confirming the overall bearish structure remains intact. Support is located near the previous low (1.321) and the psychological level (1.32).

The MACD has formed a death cross, with the signal lines remaining below the zero level, but downward momentum has weakened, signaling a potential rebound at any time. The RSI stands at 41, with investor sentiment tilted toward selling.

On the 4-hour chart, Bollinger Bands are expanding lower and MAs are pointing down, with the bearish trend unchanged. The RSI is at 35, pushing the pair into oversold territory and setting the stage for a technical rebound.

Therefore, a strategy of buying on dips is recommended.

Rate Hike Locked In! GBPUSD Set to Stabilize_1

Rate Hike Locked In! GBPUSD Set to Stabilize_2

Trade Recommendations

Trade Direction: Buy

Entry Price: 1.326

Target Price: 1.37

Stop Loss: 1.32

Support: 1.32/1.3/1.28

Resistance: 1.35/1.38/1.41

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Rate Hike Locked In! GBPUSD Set to Stabilize

Risk Disclosure