GBP/USD Forecast: Technical Breakdown & Key Levels Amidst Dollar Strength

[Redator]

The British Pound has continued its recent malaise against the US Dollar after a stellar rally ahead of the US interest rate decision. Since the decision, Cable has been on a downward trend as the US Dollar has continued to gain traction.

At the time of writing, Cable trades at 1.3343 down 0.77% for the day. The US Dollar index meanwhile is up around 0.6% on the day to trade at 98.41 but faces resistance as price has tapped the 100-day MA.

US Dollar Index Daily Chart, September 25, 2025

Source: TradingView

US Data Boosts the Dollar

US Data released today aided the greenback as it showed signs that the US economy is on a good footing.

Weekly jobless claims dropped to 218 K which is lower than the 235 K forecast and also below last week’s 232 K. At the same time, the second‑quarter GDP estimate was nudged up to 3.8 % from 3.3 %, which beat most analysts’ estimates.

August durable‑goods orders rose roughly 2.9 % after a steep dip in July, while non‑defense orders rose about 1.9 %.

The inflation side of the report was a little higher too; core PCE prices ticked up to 2.6 % from 2.5 % in Q2. In some quarters this may raise the question around persistent inflation despite Fed Chair Powell's recent comments.

Still many traders hesitate to place big bets before Friday’s August core PCE data, which likely matters a lot for the Fed’s next moves.

Fed Messaging Continues to Confuse

Looking at the date today, one could argue that criticism of Fed Chair Powell may be misplaced.

The Fed Chair has been adamant on waiting for the data or a ‘wait and see approach’. Last week's FOMC meeting saw the Fed cut rates but appeared more hawkish than expected when it comes to 2026 and 2027.

This in part could explain the USD rally as the Fed outlook diverges from current market participants expectations.

The head of the Kansas City branch of the Federal Reserve, Jeffrey Schmid, stated on Thursday that current interest rate policy is "slightly restrictive," which he believes is the correct setting.

Schmid admitted that inflation is "still too high." However, he noted that the job market is mostly healthy and "in balance." He did warn, though, that new economic reports suggest there are "rising risks" to employment. This highlights the difficult balancing act the Fed faces: keeping prices stable while ensuring strong employment (the Fed’s dual mandate).

He concluded that the Fed’s recent decision to cut interest rates was necessary to reduce the risk of job losses. He stressed that the Fed is "close to meeting its goals" but must keep looking ahead to future economic conditions.

The back and forth between policymakers looks set to continue for now. Differing viewpoints are always encouraged and that is what we are seeing from the Fed now.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Technical Analysis - GBP/USD

From a technical standpoint, GBP/USD has broken below an ascending trendline and gathered pace since.

A potential longer term correction toward the 1.3200 handle cannot be ruled at this stage.

The RSI period-14 is trading below 50 suggesting bearish momentum.

Immediate support rests at 1.3333 before the 1.3200 handle comes into focus.

Looking at a move higher here and the potential for a bounce could bring resistance at 1.3378 and 1.3500 (psychological level) respectively.

GBP/USD Daily Chart, September 25, 2025

Source: TradingView.com

Client Sentiment - GBP/USD

Looking at OANDA client sentiment data and market participants are Long on GBP/USD with 59% of traders net-long. I prefer to take a contrarian view toward crowd sentiment and thus the fact that the majority of traders are net-long suggests that GBP/USD prices could continue to slide in the near-term.

Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

Opinions are the authors'; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. The provided publication is for informational and educational purposes only.
If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please refer to the MarketPulse Terms of Use.
Visit https://www.marketpulse.com/ to find out more about the beat of the global markets.
© 2025 OANDA Business Information & Services Inc.