GBP/USD Slumps to $1.3481: Is the BoE March Rate Cut Now a Reality? Trade the $1.3330 Breakout
The British pound is in trouble on this Thursday, as a "perfect storm" of domestic economic weakness and a U.S. dollar revival...
Quick overview
- The British pound is experiencing significant declines due to a combination of domestic economic weakness and a resurgence of the U.S. dollar.
- Recent disappointing UK economic data, including a rise in the unemployment rate and a drop in inflation, has led to a shift in interest rate expectations from the Bank of England.
- The U.S. dollar is gaining strength amid geopolitical tensions and mixed signals from the Federal Reserve regarding interest rate cuts.
- Technical analysis indicates that the GBP/USD pair is in a bearish trend, with key support levels identified at $1.3449 and $1.3338.
The British pound is in trouble on this Thursday, as a “perfect storm” of domestic economic weakness and a U.S. dollar revival sends the GBP/USD pair plummeting to a new daily low of 1.3481
While the GBP/USD (also known as the “Cable”) managed to stay afloat earlier this month, things are starting to look pretty grim. For seasoned traders, the writing is on the wall: the bullish momentum we saw in late 2025 has all but disappeared, replaced by a structural bearish trend that could see the pound sliding back to levels last seen in the dark days of 2024.
The BoE “Pivot”: Why March 19 is the New D-Day
The main problem hanging around the Pound’s neck right now is a radical shift in interest rate expectations. Just a few weeks back, markets were banking on the Bank of England (BoE) taking a “higher for longer” stance. But all of that’s been torn apart by a string of pretty disappointing UK data:
- Jobless Rate Jumps Up: The UK unemployment rate surprisingly jumped to 5.2% in December, a level we haven’t seen since March 2021.
- Inflation Takes a Breather: The headline CPI has finally started to dip down towards the 2% target a little quicker than the BoE itself was expecting, and that’s resulted in a reading that’s its lowest in nearly a year.
As a result, futures markets have been rapidly repricing the chances of a 25-basis-point rate cut on March 19, 2026 and the likes of Morgan Stanley and UBS have already flipped their calls to “March Cut”, that of course is causing the Pound to lose value as its “yield advantage” starts to wear off.
The “Greenback” Renaissance: Safe-Haven Flows & Fed Hawkishness
While the Pound is being pushed down, the U.S. Dollar is being pulled up the other way. The Dollar Index (DXY) hit a two week high today for a couple of good reasons:
- Fed Minutes: The FOMC Divided: The Fed minutes from January revealed a central bank that is a long way from “dovish”. While some members are on the side of cutting interest rates, a pretty vocal group is warning that easing too early could “put the Fed’s inflation target at risk”. That uncertainty is basically a buy signal for dollar bulls.
- Geopolitical Jitters: Rumours of US military action against Iran have triggered the classic “flight to quality”. When tensions are high, the world buys Dollars and leaves riskier currencies like the Pound in the dust.
GBP/USD Technical Analysis: The $1.3449 “Trapdoor”
Structurally, the GBP/USD chart is a textbook example of a bearish trend. Right now the pair is stuck in a descending trend channel and every time it tries to rally it gets clobbered by selling pressure.
Key Technical Levels:
- Immediate Support: $1.3449. If we break below this level, the floor just drops away.
- Key Target: $1.3338. This represents the next support zone from the late January consolidation.
- Resistance Zone: $1.3513 – $1.3581. This zone was recently support, and now it’s a brick wall for any recovery attempt.
Market Momentum: With the pair now trading below both the 50-day EMA ($1.3590) and the 200-day EMA ($1.3601), the path of least resistance is down.
The Verdict: Sell On The Bounces
For the “newbie” trader, trying to catch a falling knife is just not worth the risk. For the pros however, today’s breakdown below 1.3510 was the signal to short the Pound. Unless the Pound can reclaim the 1.3580 handle on a daily closing basis, the Cable is headed for a pretty deep correction.
Trade Idea:
- Entry: Sell below $1.3440
- Target: $1.3338 (Long-term) / $1.3400 (Short-term)
- Stop Loss: Above $1.3515
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