1.30 A Step Too Far for Pound-to-Dollar

Key risks to GBP include next week's spending review in Parliament.

GBP/USD might struggle to break 1.30.

Pound Sterling's run higher against the Dollar has faltered, although, for now, this looks to be a temporary setback.

The Pound-to-Dollar exchange rate (GBP/USD) rose to a four month high of 1.2987 on Wednesday, and has since retraced those gains to 1.2927 at the time of writing Friday.

A soft UK GDP reading (-0.1% m/m in January) provides some fundamental narrative for the retreat.

"The pound is on the back foot after data revealed that the UK economy contracted," says George Vessey, Lead FX Strategist at Convera. "Sterling is set for another week of gains against the dollar but has yet to breach the crucial $1.30 mark."

GBP/USD's daily chart shows that the recent high coincided with overbought conditions that required a pullback or consolidation, and in this respect, the correction is warranted.

1.30 will meanwhile prove to be a notable psychological and graphical resistance point. For instance, some readers have been in touch with us to say they are transferring funds just ahead of 1.30 as they anticipate a setback there.

This pattern of thinking, if repeated across the FX space, explains why technical resistance at big numbers is a force to be reckoned with.

"Perhaps a push above 1.30 will prove a step too far if the challenges facing the UK economy become prominent once again," says Daragh Maher, Senior FX Strategist at HSBC.

Above: GBP/USD at daily intervals. | Bank of America Predicts 1.44 for GBP/USD! If they're right, waiting could mean missing out on better rates. Find out more.

"1.30 remains a major resistance level while, to the downside, we watch support at 1.25," says Patrick Ernst, FX Strategist at UBS Chief Investment Office.

GBP/USD's run higher is largely a function of the significant reappraisal of the U.S. economic outlook, which has deteriorated under President Trump's first weeks in office.

Policy uncertainty and job cuts are weighing on confidence, and this is translating into weaker economic surveys.

As long as the unwind of the 'U.S. exceptionalism' trade continues, Pound-Dollar weakness can prove limited.

"GBP/USD broke out from a base last month resulting in an extended bounce. It looks poised to head gradually towards November high of 1.3045 and 1.3150/1.3175. Recent pivot low of 1.2550 is near term support," says Tanmay Purohit, a technical analyst at Société Générale.

Bank of America Predicts 1.44 for GBP/USD! If they're right, what does it mean for you? Read more.

"Trends remain GBP-supportive on the short– and medium-term charts and the GBP should find support on minor dips ahead of 1.2910 support. Resistance is 1.30 ahead of a push on to 1.3125/50," says Shaun Osborne, FX Strategist at Scotiabank.

It's a big week for the Pound Sterling next week, with the Bank of England, the spending review and inflation data on the docket.

We would see scope for independent GBP movement depending on the various outcomes.

"From current levels, we believe the pair will go lower in the remainder of 1H before going higher in 2H. We recently introduced a March 2026 forecast and see GBPUSD at 1.31 by year-end. We also like strategies selling upside for yield pickup," says Patrick Ernst, FX Strategist at UBS Chief Investment Office.