GBP/USD continues to rise on Wednesday, reaching 1.3516.
Following recent comments from Bank of England Governor Andrew Bailey, investors are seeking additional clarification on his decision to keep the rate unchanged at the last meeting. The Monetary Policy Committee left the rate unchanged, with a narrow margin.
The market expects two rate cuts in 2026, taking the rate down to 3.25%. However, the timing of the easing remains uncertain. If Bailey signals the possibility of a cut as early as March, the market could begin pricing in more than 50bps of easing this year.
An additional source of pressure stems from US President Donald Trump’s trade policy. The baseline tariff of 10% has already entered into force. However, it remains unclear when an increase to 15% might be introduced.
The focus is also on the by-election in the Gorton and Denton constituency in Manchester, which is seen as an important test for Prime Minister Keir Starmer and the Labour Party. Political uncertainty is adding to sterling volatility.
Technical Analysis
On the H4 GBP/USD chart, the market is forming a broad consolidation range around the 1.3500 level. Today, an expansion towards 1.3560 is possible. Subsequently, a correction towards 1.3494 may follow. After completing this correction, a new consolidation range is likely to form. If it breaks to the upside, the next target would be 1.3622. If it breaks to the downside, the next target may be 1.3383. Technically, this scenario is confirmed by the MACD indicator. Its signal line is below the zero level and pointing upward.
On the H1 GBP/USD chart, the market formed a compact consolidation range around 1.3500 and, following an upside breakout, is developing a wave structure towards 1.3560. Subsequently, a downward move towards 1.3500 cannot be ruled out. Technically, this scenario is confirmed by the Stochastic oscillator. Its signal line is above the 50 level and pointing upward.
Conclusion
In summary, GBP/USD extends its recovery for a fourth consecutive session as markets await clearer signals from BoE Governor Bailey on the timing of potential rate cuts. While the baseline scenario anticipates two reductions this year, any dovish surprise could trigger further repricing. Technically, the pair is building momentum within a broad consolidation range, with near-term resistance at 1.3560 and support at 1.3494. A sustained break above 1.3560 would open the door to 1.3622, while a failure could result in a retest of lower-range levels. Political uncertainty from the upcoming by-election and ongoing US trade policy risks add further volatility. The near-term bias remains cautiously bullish, but direction will depend on Bailey’s tone and market interpretation.
