GBP/USD Forecast: Sterling Eyes 1.36500 amid ECB Rate Decision and Trade Negotiations

The GBP/USD currency pair, often referred to as "Cable" in forex trading circles, has been demonstrating resilience, holding firm at $1.3581 after a notable 0.36% gain in the previous trading session. As the market looks ahead, traders are setting their sights on a daily target of $1.36500, driven by a combination of technical momentum, macroeconomic developments, and anticipation surrounding key events such as the European Central Bank’s (ECB) interest rate decision. This article delves into the GBP/USD forecast for July 24, 2025, analyzing the factors influencing the pound sterling, including trade negotiations, ECB monetary policy expectations, and technical analysis, to provide a comprehensive outlook for forex investors and traders.

GBP/USD Price Action and Technical Analysis

The GBP/USD pair has shown steady upward momentum, with the recent close at $1.3581 reflecting a 0.36% gain, signaling bullish sentiment in the market. Technical analysts are eyeing a potential move toward $1.36500 as the next significant resistance level for the day. This target aligns with recent price action, where the pair has been testing key levels above its 50-day and 200-day exponential moving averages (EMAs), indicating a sustained bullish trend.

From a technical perspective, the Relative Strength Index (RSI) for GBP/USD is currently hovering in neutral territory, suggesting room for further upside before the pair enters overbought conditions. The recent break above the 18-month rising wedge support at $1.2682, as noted by FXStreet, indicates that while downside risks remain, the current momentum favors buyers targeting $1.36500. A decisive close above this level could pave the way for further gains toward $1.37000, a psychological and technical resistance zone.

Support levels to watch include $1.35500, which aligns with the 50-day EMA, and $1.3380, a critical pivot point where buyers have previously stepped in. Should the pair fail to breach $1.36500, a pullback to these support levels could present buying opportunities for traders looking to capitalize on the bullish trend. The daily chart also shows increasing trading volume, reinforcing the potential for a breakout toward the target.

ECB Rate Decision: A Key Catalyst for GBP/USD

The European Central Bank’s interest rate decision, scheduled for later today, July 24, 2025, is a pivotal event for the GBP/USD pair. Market consensus, as reflected in recent analyses, suggests that the ECB will likely maintain its current interest rate stance, with the deposit facility rate at 2.00% following a series of 25-basis-point cuts in 2025. This expectation is supported by recent data showing eurozone inflation at 1.9% in May, below the ECB’s 2% target, and core inflation easing to 2.4%.

While the ECB is expected to stand pat on rates today, markets will closely scrutinize the accompanying statement and ECB President Christine Lagarde’s press conference for clues about the future monetary policy outlook. Investors are particularly focused on whether the ECB will signal another rate cut by year-end, with December 2025 being the most likely candidate for a 25-basis-point reduction. A dovish tone from the ECB, indicating further easing, could weaken the euro against the dollar, indirectly supporting GBP/USD as the dollar faces pressure from a relatively dovish Federal Reserve outlook.

The ECB’s data-dependent approach, emphasized in recent communications, suggests that any hints of further cuts will hinge on inflation and growth projections. The ECB’s latest forecasts project headline inflation at 2.0% in 2025 and 1.6% in 2026, with core inflation expected to average 2.4% in 2025. Weak economic growth, projected at 0.9% for 2025, coupled with trade uncertainties, further supports the case for additional easing, which could bolster GBP/USD by weakening the euro relative to the pound.

Trade Negotiations and Their Impact on GBP/USD

Trade negotiations remain a critical factor influencing the GBP/USD pair, particularly in light of U.S. President Donald Trump’s aggressive tariff policies. The threat of tariffs on European goods, including those from the UK, has introduced significant uncertainty into the forex market. Recent developments indicate that while some tariffs have been paused or eased, the potential for renewed duties on steel, aluminum, and other key industries continues to weigh on investor sentiment.

For the UK, trade negotiations with the U.S. are particularly significant, given the importance of bilateral trade to the British economy. The pound sterling is sensitive to any developments that could disrupt trade flows or economic growth. Positive progress in trade talks, such as exemptions or favorable terms for the UK, could provide a tailwind for GBP/USD, supporting the push toward $1.36500. Conversely, any escalation in trade tensions could pressure the pound, potentially capping gains or triggering a pullback.

The broader geopolitical landscape, including the U.S.-Japan trade deal and ongoing EU-U.S. negotiations, also plays a role. A successful resolution to trade disputes could enhance risk appetite, boosting equities and risk-sensitive currencies like the pound. Recent posts on X highlight optimism surrounding trade deals, with one noting that “hopes for more deals increase” following the U.S.-Japan agreement. Such developments could indirectly support GBP/USD by fostering a risk-on environment.

Bank of England vs. Federal Reserve: Diverging Monetary Policies

The GBP/USD pair is also influenced by the monetary policy divergence between the Bank of England (BoE) and the Federal Reserve (Fed). The BoE has adopted a more dovish stance in response to a fragile UK economy, with market expectations pricing in up to three quarter-point rate cuts in 2025. This contrasts with the Fed’s cautious approach, as it navigates strong U.S. economic growth and rising inflationary pressures under the Trump administration.

Recent X posts suggest that softer UK jobs data and cooling U.S. inflation have eased pressure on the BoE and Fed, respectively, contributing to GBP/USD’s upward momentum. The Fed’s decision to leave rates unchanged in its latest meeting, coupled with expectations of fewer cuts compared to the ECB, has kept the dollar relatively stable, allowing the pound to gain ground.

The BoE’s dovish tilt could limit the pound’s upside potential in the long term, but near-term bullish sentiment, driven by technical factors and trade optimism, supports the target of $1.36500. Traders should monitor upcoming UK economic data, including fiscal updates and employment figures, which could influence the BoE’s policy path and, consequently, GBP/USD.

Broader Economic Context and Market Sentiment

The broader economic context provides additional context for the GBP/USD forecast. The UK’s decision to ease foreign investment rules has boosted market sentiment, as noted in a recent X post, potentially sustaining the pound’s momentum. However, fiscal challenges and the impact of global trade uncertainties could temper this optimism. The eurozone’s economic challenges, including sluggish growth and trade policy uncertainty, also play a role, as a weaker euro can indirectly support GBP/USD by strengthening the pound against the euro.

Market sentiment remains cautiously optimistic, with European stocks rallying on trade optimism and positive corporate earnings. This risk-on environment could further bolster GBP/USD, particularly if the ECB’s rhetoric reinforces expectations of monetary easing. However, traders should remain vigilant for any surprises in the ECB’s statement, as a hawkish shift could strengthen the euro and pressure GBP/USD.

Trading Strategies for GBP/USD

For traders looking to capitalize on GBP/USD’s potential move to $1.36500, several strategies are worth considering:

1. Breakout Strategy: Enter a long position if GBP/USD breaks above $1.36000 with strong volume, targeting $1.36500. Place a stop-loss below $1.35500 to manage risk.
2. Pullback Strategy: If the pair retraces to the $1.35500 support level, consider buying on confirmation of support, with a target of $1.36500 and a stop-loss below $1.35000.
3. News-Based Trading: Monitor the ECB rate decision and Lagarde’s press conference for dovish signals. A dovish outcome could trigger a rally toward $1.36500, while a hawkish surprise may lead to a pullback.

Risk management is crucial, given the uncertainties surrounding trade negotiations and monetary policy. Traders should use appropriate position sizing and stop-losses to protect against unexpected volatility.

Conclusion

The GBP/USD pair is poised for a potential move toward $1.36500 on July 24, 2025, driven by technical momentum, a favorable risk-on environment, and anticipation surrounding the ECB’s interest rate decision. While the ECB is expected to maintain rates, its forward guidance will be critical, with markets pricing in a likely rate cut in December. Trade negotiations, particularly U.S. tariff policies, remain a key risk factor, but positive developments could support the pound’s upside. The divergence between the BoE and Fed’s monetary policies, combined with UK economic data, will also shape the pair’s trajectory. Traders should stay informed, monitor key levels, and employ disciplined strategies to navigate the dynamic forex market.