GBP/USD Price Forecast: Extends recovery to near 20-day EMA as US Dollar weakens

• GBP/USD clings to weekly gains near 1.3565 amid weakness in the US Dollar.
• Investors worry that trading partners of the US could demand revisions in trade deals.
• The BoE is expected to reduce interest rates in its March policy meeting.

The Pound Sterling (GBP) holds onto weekly gains around 1.3565 against the US Dollar (USD) during the Asian trading session on Thursday. The GBP/USD pair trades firmly as the US Dollar remains under pressure due to uncertainty surrounding the United States (US) trade policy outlook.

During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades marginally lower to near 97.55.

The US trade policy uncertainty stemmed from the Supreme Court’s (SC) ruling against President Donald Trump’s tariffs, in which they were called “unlawful” for being backed by economic emergency powers.

Meanwhile, market participants are worried that Washington’s trading partners could ask for trade deal revisions, in a way to benefit from the SC’s ruling. However, US President Trump has already warned of steeper levies if any nation intends to dishonour trade deals.

On the Pound Sterling front, the outlook for the currency is broadly uncertain as the Bank of England (BoE) is expected to deliver an interest rate cut in its monetary policy meeting in March.

GBP/USD technical analysis

GBP/USD trades firmly at around 1.3565 at the press time. The pair holds around the 20-day Exponential Moving Average, which is at 1.3562, capping directional conviction.

Price action has stabilized after the pullback from mid-month highs, with the latest candles clustering around the average and signaling consolidation rather than a clear trend extension.

The 14-day Relative Strength Index (RSI) in the 40.00-60.00 range shows neutral momentum, reinforcing a sideways tone.

Initial support emerges at the February 19 low of 1.3434, the nearest swing low, and a downside move towards the January 19 low at 1.3344 is possible if the price fails to hold the same. On the upside, the pair could attempt to revisit an almost four-year high of 1.3869 if it delivers a decisive breakout above the February 11 high of 1.3712.