The GBP/USD has hit a new low due to strong selling pressure. The pair is currently trading below its 100-day moving average of 1.33339, which used to provide temporary support but is now failing with sellers in control. This price drop makes the technical outlook more negative, continuing the bearish trend. Attention is now on the 38.2% retracement level of the 2025 move, from low to high, at 1.31403. This level coincides with a critical swing area between 1.3145 and 1.3202, making it an important target.

Price Dynamics and Key Levels

If the price drops below this range, sellers may gain further momentum. The current struggle lies between the resistance at the 100-day moving average and the support range of 1.3140–1.3200. The Federal Open Market Committee is set to meet soon, and rates are likely to remain steady. However, it’s uncertain if the Federal Reserve will adopt a more dovish stance, especially with rising inflation expectations due to tariffs. The GBP/USD is breaking below its 100-day moving average, signaling bearish trends for the upcoming weeks. As long as the pair stays under 1.33339, the most likely path is downward. This suggests that strategies favoring a weaker pound against the dollar should be explored.

Fed Meeting and Market Strategies

The main downside target is the range between 1.3140 and 1.3202. This area is crucial, representing the 38.2% Fibonacci retracement of the entire 2025 rally. Traders should watch this level as a likely draw for price in the near future. The focus is now on the Federal Reserve’s meeting later today, which will affect market volatility. A dovish outlook is expected due to concerns about new tariffs harming the economy. This may weaken the US dollar and push prices closer to our 1.3140 target. The current market unease is understandable based on recent data. The US CPI for June 2025 showed an unexpected 3.1% increase, mainly due to new tariffs on UK and EU goods introduced last month. The market believes the Fed will prioritize growth over addressing this inflation. History provides a useful reference; the Fed’s pivot in late 2018 during similar trade war pressures and slowing global growth led to a shift from tightening to easing, weakening the dollar significantly. This history supports the anticipation of a softer Fed stance today. Given this outlook, traders might consider buying put options on GBP/USD with expiration dates in August or September 2025. Strikes around the 1.3200 level could offer a way to profit from the expected decline toward the key retracement zone. This strategy limits risk to the premium paid while allowing for potential gains from the downward move. Create your live VT Markets account and start trading now.

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