GBPUSD is currently trading near 1.34470, slightly off its recent highs following a powerful two-day surge. The pair caught a strong bid thanks to broad dollar weakness, fueled by the Federal Reserve's (Fed) decision to stand pat—and a surprisingly deep split within its ranks. Such a mix sets the stage for a sharp rally, but the real test has yet to come.
On Wednesday, the American regulator held interest rates at 3.50%–3.75% for the fifth consecutive meeting. Still, the real story was the vote: three policymakers called for a hike, marking the largest dissent since 2016. New Chairman Kevin Warsh added to the unease by offering little clarity on the future monetary path, leaving the markets guessing. This uncertainty, in turn, kept traders on edge.
Thursday brought more action. The Bank of England (BoE) kept borrowing costs at 3.75%, though the verdict was unexpectedly hawkish—6-3 in favor of a hold, versus the expected 7‑2. Dissenters were concerned about inflation risks from volatile energy prices. This sent GBPUSD briefly above 1.34756. For a moment, it looked like buyers were about to take full control.
On the flip side, the excitement was short-lived. Governor Andrew Bailey quickly poured cold water on the rally, stressing that the vote shouldn't be read as a sign of an imminent hike. Add to that the UK's lingering fiscal uncertainty, and the pound's upside quickly ran out of steam. By Friday morning, the pair had pulled back to 1.34500, as the dollar rebounded and traders booked profits.
Technically, the picture is clear. After a 1.45% surge over two sessions, Friday's decline seems to be a healthy correction. The Chaikin Oscillator has been climbing steadily from a July 28 low, nearly touching the zero line by July 30. However, as the indicator's momentum stalls and the price pulls back, it is a telltale sign that bulls simply don't have enough firepower to break decisively above the 1.35000 psychological barrier.
For those ready to make a move, here is the trading plan:
Sell GBPUSD at 1.34470. Place Take profit at 1.33700. Set Stop loss at 1.35000.
This forecast holds true from July 31 till August 7, 2026.
This content is for informational purposes only and is not intended to be investing advice.
