GBP/USD was almost unchanged on Wednesday, up 0.08% to about 1.3370 in a quiet session. It has dropped from a late-January peak near 1.3870 and is now testing the 200-day EMA, while the one-week forex heatmap shows Sterling down about 1.4% against the US Dollar this week. In the UK, Rachel Reeves delivered the Spring Statement, and the OBR cut its 2026 growth forecast to 1.1% from 1.4% due to weaker activity in late 2025 and higher unemployment. The OBR said its forecasts were finalised before the US-Israeli strikes on Iran, and warned the conflict could have large effects on the global and UK economies.

Energy And Bank Of England Expectations

Energy prices rose after the closure of the Strait of Hormuz, and markets reduced bets on a Bank of England rate cut on 19 March. Futures now price less than a 15% chance of a cut. In the US, demand for the Dollar has been supported by safe-haven flows, with key releases due on Friday, including Nonfarm Payrolls and January Retail Sales. Technically, GBP/USD is below the 50-day EMA, with resistance near 1.3505 and focus returning to 1.3650 if it closes above that level. Support sits near the 200-day EMA around 1.3375, then 1.3360 and 1.3300. A break below these levels would point to further downside on the medium-term chart. We have seen the Pound break below the critical 200-day moving average at 1.3375, a level it was only testing a day ago. The pair is now trading near 1.3350, confirming a bearish technical signal and suggesting that sellers are gaining more control. This break is significant as it had been a key support level for months.

Strategy And Risk Management

The fundamental picture for the UK has worsened since the recent Spring Statement. The February 2026 manufacturing PMI data, released just this morning, came in at 48.5, indicating a contraction and giving credit to the OBR’s decision to cut the growth forecast. This confirms the weaker economic activity we were already seeing in late 2025. On the other side of the pair, safe-haven demand for the US dollar remains strong due to the unresolved tensions around the Strait of Hormuz. Brent crude oil prices have held firm above $95 per barrel for over a week, reinforcing global economic uncertainty. All eyes are now on tomorrow’s US Nonfarm Payrolls report, with consensus forecasts anticipating a solid gain of around 210,000 jobs, which would further support the dollar. This creates a clear policy divergence between the central banks. The Bank of England is stuck between a slowing economy and high energy-driven inflation, making it very unlikely they will act at the March 19 meeting. Meanwhile, the Federal Reserve faces no immediate pressure to cut rates, given the robust US labour market and persistent global risks. Given this outlook, we should consider buying GBP/USD put options to profit from further downside. A sustained break below 1.3360 opens the door to the 1.3300 psychological level in the near term. Options with an expiry date after the March 19th Bank of England meeting could capture any additional volatility. For those wanting to manage risk, the 50-day average near 1.3505 now acts as firm resistance and a logical level for stop-losses on short positions. A bear put spread could also be an effective strategy, allowing us to bet on a decline while lowering the upfront cost of the position. This is a more conservative way to express a bearish view on the pound. Create your live VT Markets account and start trading now.

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