GBP/USD Tests 1.3365 as UK Inflation Pressures PoundGBP/USDOANDA:GBPUSDJohn_IsigeThe GBP/USD pair is extending its decline, testing the 1.3365 level as investors assess the latest UK inflation data and shifting expectations for Bank of England policy. The pound remains under pressure after two consecutive bearish sessions, with traders focusing on macroeconomic developments and monetary policy outlook. ⸻ UK Inflation Remains Elevated UK inflation data showed mixed but overall hawkish signals: •Core CPI: 3.2% (up from 3.1%) •Headline CPI: 3.0% (unchanged) •Monthly CPI: 0.4% (vs −0.5% previously) Although the market reaction was muted, analysts note that February data does not yet reflect rising energy costs, meaning inflation risks remain elevated. ⸻ Inflation Expectations Surge A Citi survey revealed a sharp rise in UK inflation expectations: •Previous expectations: 3.3% •Current expectations: 5.4% (highest in 20 years) This increases pressure on the Bank of England to maintain restrictive policy. ⸻ Bank of England Holds Hawkish Tone At the March 19 meeting: •Rate unchanged at 3.75% •Decision unanimous for first time since 2021 •Hawkish language strengthened Officials removed the phrase about near-term rate cuts, signaling a more cautious policy stance. ⸻ UK Fiscal Risks Add Pressure Additional pressure comes from fiscal data: •Budget deficit: £14.3B (above expectations) •Public debt: 93.1% of GDP •Rising borrowing costs increase vulnerability These factors weigh on the British pound. ⸻ US Dollar Remains Supported US data continues supporting the dollar: •Manufacturing PMI: 52.4 (strong) •Services PMI: 51.1 (moderate slowdown) •Fed maintains hawkish stance This strengthens downward pressure on GBP/USD. ⸻ Technical Analysis Indicators support bearish momentum: •Bollinger Bands: moderate decline •MACD: renewed sell signal •Stochastic: turning lower ➡️ Short-term bias remains bearish ⸻ Key Levels Resistance •1.3402 •1.3455 •1.3500 •1.3550 Support •1.3338 •1.3305 •1.3252 •1.3215 ⸻ Trading Scenarios Bearish Scenario Sell below 1.3338 •Entry: 1.3335 •Target: 1.3215 •Stop-loss: 1.3402 •Timeframe: 2–3 days ⸻ Bullish Scenario Buy above 1.3402 •Entry: 1.3405 •Target: 1.3500 •Stop-loss: 1.3338 ⸻ Outlook GBP/USD remains under pressure as UK inflation risks, fiscal concerns, and Fed policy divergence weigh on the pound. •Break below 1.3338 → bearish continuation •Break above 1.3402 → corrective rebound Short-term bias remains bearish.