GBP/USD, Gold Forecast: Two Trades to Watch

GBP/USD Falls Ahead of BoE Decision and Key UK Inflation Data

GBP/USD is edging lower after modest gains in the previous session, as a firmer U.S. dollar and caution ahead of developments in U.S.-Iran peace talks offset support from easing energy prices.

Attention is turning to this week's Bank of England meeting, where policymakers are widely expected to leave interest rates unchanged at 3.75%. However, the vote split and accompanying guidance could prove more important than the decision itself as the MPC balances elevated inflation against signs of a weakening economy.

UK inflation data, due ahead of the meeting, is expected to show price pressures rose to 3.3% in May, well above the Bank's 2% target. However, policymakers are also facing evidence of slowing growth, with UK GDP contracting 0.1% month-on-month in April and labour market conditions continuing to soften.

This leaves the Bank in a difficult position. Higher inflation would normally argue for tighter policy, but weaker growth and a cooling jobs market reduce the need for immediate action.

As a result, investors will focus closely on the vote split and any changes in the Bank's guidance. A more hawkish-than-expected vote or signals that policymakers remain concerned about inflation could support sterling. Conversely, greater emphasis on slowing growth could reinforce expectations that rates will remain unchanged for an extended period.

Alongside the BoE meeting, investors will also be watching Thursday's Macclesfield by-election. While the vote is unlikely to move markets directly, it could influence expectations around the UK's political outlook. A strong performance by Andy Burnham may fuel speculation over future Labour leadership ambitions and a potentially more expansionary fiscal stance. At a time when the UK's fiscal position is already under scrutiny, any shift towards higher spending expectations could limit sterling's upside.

GBP/USD Forecast – Technical Analysis

GBP/USD is trading just above rising trendline support while consolidating around the 200-day SMA at 1.3420. The RSI remains below 50, suggesting momentum is neutral to slightly bearish.

Buyers need to reclaim the 200-day SMA to improve the near-term outlook. A move above 1.3475, the 50-day SMA, would bring 1.3500 and the late-May high into focus. Above there, a break of trendline resistance at 1.3550 could open the door towards 1.3600 and 1.3650.

On the downside, support can be seen at 1.3335. A break below this level would expose the 1.3200 support zone, which has acted as a key floor since early April.

Gold Holds Gains Ahead of Key Fed Decision

Gold is holding on to Monday's gains as optimism surrounding a U.S.-Iran agreement due to be signed on Friday has pulled oil prices lower, easing inflation concerns and reducing expectations of further monetary tightening.

The precious metal has rallied more than 6.5% in recent days. However, that rebound appears to be losing momentum above the 4,300 level as investors await details of the agreement and turn cautious ahead of major central bank decisions this week.

Markets are still seeking clarity on issues such as shipping through the Strait of Hormuz and Iran's nuclear programme, meaning the risk of renewed tensions has not been fully removed.

Attention is also turning to the Federal Reserve, which begins its two-day policy meeting today, with a decision due tomorrow.

The Fed is widely expected to leave interest rates unchanged at 3.50%-3.75% in Kevin Warsh's first meeting as Chair. However, investors will be watching closely for any changes to the Fed's guidance.

While lower oil prices have eased some inflation concerns, inflation remains above target and the labour market continues to show resilience. This gives the Fed scope to maintain a restrictive policy stance. As a result, policymakers may choose to remove the easing bias contained in their previous statement.

A more hawkish-than-expected message could lift Treasury yields and the U.S. dollar, creating a headwind for non-yielding assets such as gold.

Gold Forecast – Technical Analysis

After breaking below a symmetrical triangle pattern and the 200 SMA, gold fell to support at 4,100 before recovering higher.

The rebound is now testing resistance at 4,375, the May low. However, with the RSI remaining below 50, momentum remains weak and gains could struggle to extend.

Failure to retake 4,375 could see sellers re-emerge, bringing 4,100 back into focus. A break below this level would expose 3,930, the November 2025 low.

On the upside, a move above 4,375 would bring the 200 SMA at 4,460 into focus, followed by 4,500 and the 50 SMA at 4,580. A break above the May high at 4,775 would create a higher high and strengthen the bullish outlook.