• The GBP/USD forecast remains mildly positive ahead of BoE’s rate decision. 
• UK macroeconomics keep clouding the overall outlook of the pound. 
• MPC vote split is important to watch along with the BoE’s rate decision. 

The GBP/USD forecast has turned slightly positive as the pair managed to reclaim the 1.3300 handle on Wednesday ahead of the Bank of England’s key rate decision on Thursday. Despite the mild gains, the sentiment remains cautious as traders weigh weaker UK data.

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The UK’s central bank is widely expected to reduce the interest rates by 25 bps to 4.0%, with more rate cuts to follow later this year. The decision comes at a time when the inflation remains stubbornly high, around twice the 2% target of BoE. Meanwhile, the signs of economic slowdown are keeping policymakers under pressure to support growth.

A major concern is the UK’s construction sector, which showed the sharpest contraction in over five years. The construction PMI dropped to 44.3 in July, down from June’s 48.8. This is the lowest reading since May 2020, during the pandemic peak.

This, combined with softer economic data, has strengthened the odds of BoE’s rate cut. Though high inflation discourages central banks from cutting rates, the priority seems to be supporting growth in the short term. The recent move of the pound shows a complex balance of forces, including loose monetary policy, higher inflation, and downbeat economic data. Despite the short-term optimism, the overall outlook remains clouded by macroeconomics.

All eyes are now on Thursday’s BoE decision, which could set the tone for GBP/USD in the coming weeks. A dovish tone or deeper-than-expected cut may put further pressure on the pound, while a more cautious approach could offer temporary relief.

GBP/USD Technical Forecast: Bulls Aiming for 1.3370

The 4-hour chart for the GBP/USD pair shows a slight bullish momentum, staying above the 20-period SMA. The price is gradually moving up to test the previously broken support that acts as a resistance around 1.3370. The ultimate target lies at the 200-period MA near 1.3500. Above this level, the bias will be turned strongly bullish.

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The RSI has also moved above the 50.0 mark, suggesting room for more gains. However, the momentum is not strong enough and lacks a catalyst to push beyond the cluster of resistance levels.

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