GBP/USD Outlook: Hawkish BoE Policy Keeps Bullish Bias Intact

The GBP/USD pair maintains a bullish trajectory within its annual trading range following a liquidity sweep below the June 24 low. Recent price action saw a positive reaction from bullish Imbalance 31, driving price higher and creating a new bullish Imbalance 32 lower in the structure. Despite a brief consolidation phase, the overall technical framework continues to favor upward momentum.

Monetary Policy Divergence Supports Sterling

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Fundamentally, the Bank of England delivered a decidedly hawkish interest rate hike, backed by a unanimous vote from the Monetary Policy Committee. Market expectations currently price in up to three rate hikes from the BoE, compared to just one or two projected hikes from the Federal Reserve based on recent FOMC minutes and dot plot forecasts. This structural divergence in policy expectations favors the British pound over the US dollar.

Geopolitical Risk Context

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Broad dollar strength seen in prior months was largely tied to safe-haven demand stemming from US-Iran geopolitical friction. With active hostilities currently on hold, the dollar's safe-haven premium has diminished. Unless renewed geopolitical escalation occurs, fundamental drivers continue to point toward a weaker US dollar over the broader horizon.

US Economic Catalysts Ahead

Market attention now turns to key economic releases from the United States, including Nonfarm Payrolls, the Unemployment Rate, Average Hourly Earnings, and the University of Michigan Consumer Sentiment Index. These high-impact data points are expected to drive near-term volatility, potentially offering a corrective entry into support or launching the next bullish leg higher.

Technical Forecast and Key Levels

The broader outlook for GBP/USD remains bullish within the daily range. Corrective pullbacks toward bullish Imbalance 32 provide structured risk-reward opportunities to position for further upside. The primary target for buyers remains near the upper boundary of the daily trading range around 1.3670.

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