GBP/USD Price Forecast: Gains momentum, first upside barrier emerges near 1.3550

• GBP/USD gathers strength near 1.3510 in Tuesday’s Asian session. 
• Expectations that the BoE will follow a gradual monetary easing path in 2026 support the Pound Sterling. 
• The first upside barrier emerges at 1.3550; the first support level to watch is 1.3410. 

The GBP/USD pair trades with mild gains around 1.3510 during the early European session on Tuesday. The Pound Sterling (GBP) strengthens against the US Dollar (USD) as the Bank of England (BoE) guided that monetary policy will remain on a gradual downward path.

The UK central bank cut its benchmark interest rate by 25 basis points (bps) to 3.75% at its December meeting. Governor Andrew Bailey said during the press conference that rates are likely to continue on a gradual downward path, but “how much further we go becomes a closer call” with each cut. Money markets believe the BoE will deliver at least one rate cut in the first half of the year and are pricing in nearly a 50% probability of a second before the year-end, according to Reuters.

Traders continue to price in the prospect of further rate cuts by the Federal Reserve (Fed) in 2026, following a quarter-point reduction delivered at the December meeting. The Federal Open Market Committee (FOMC) Minutes will be published later on Tuesday. Trading volumes are expected to remain thin ahead of the New Year holidays.

Technical Analysis:

In the daily chart, GBP/USD holds well above the rising 100-day EMA at 1.3335, preserving a bullish profile. It also remains north of the 20-day average, underscoring trend support. RSI (14) sits at 69.87 near overbought. The upper Bollinger Band at 1.3550 caps the immediate advance. A daily close above that barrier would extend the climb, while the bias stays bullish above the EMA.

Bollinger Bands have narrowed modestly as price holds just beneath the upper band, signaling reduced volatility alongside persistent buying pressure. Initial support aligns with the 20-day middle band at 1.3410, followed by the lower band at 1.3270. A pullback into the mid-band would meet buyers, while a break lower could expose the lower boundary and slow the uptrend’s momentum.