GBP/USD Price Forecast: Finds ground slightly below 20-day EMA

The British Pound (GBP) is marginally higher at around 1.3545 against the US Dollar (USD) during the European trading session on Monday. The GBP/USD pair rebounds as the US Dollar corrects after a strong upside move on Friday.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.15% lower to near 99.53.

The US Dollar gained significantly on Friday, following a speech from Federal Reserve (Fed) Chair Kevin Warsh at the Jackson Hole Symposium, where he warned of upside inflation risks.

Fed chair Warsh signals readiness to keep tightening until inflation improves

Rabobank’s Elwin de Groot highlights that Kevin Warsh struck a notably tougher tone on inflation at Jackson Hole. More importantly, he notes that, for the first time since becoming Chair, Warsh “explicitly expressed dissatisfaction with recent inflation developments and signalled that he was open to further rate hikes unless underlying inflation began to improve convincingly.” As Warsh put it, “We must be convinced that underlying inflation is moving toward our target clearly and at a sufficient pace. Otherwise, we still have work to do.”

Rabobank’s De Groot argues that this formulation underscores the Fed’s willingness to extend the tightening cycle if disinflation stalls, reinforcing upside risks around the policy path even as longer-term rate premia have eased.

GBP/USD Technical Analysis

In the daily chart, GBP/USD trades at 1.3543. The pair holds a mildly bullish near-term bias as it consolidates directly on the 20-day exponential moving average (EMA) at 1.3543 after a corrective move. The pair trades inside a Rising Channel pattern, suggesting that the overall trend will remain bullish but in a limited range.

The Relative Strength Index (RSI) at 52.97 sits just above the neutral 50 mark, hinting at steady but not overstretched upside momentum as the pair respects the reclaimed trend structure.

On the downside, initial support is aligned with the 20-day EMA at 1.3543, which acts as an immediate pivot, followed by firmer demand at the former trend-line break area near 1.3420. Looking up, the pair needs to return decisively above 1.3600 to reclaim the six-month high at 1.3676.