GBP/USD Drops Toward 1.2900 as UK Inflation Misses Forecast Ahead of Budget Report

The GBP/USD pair continues to slide in European trading on Wednesday, nearing the 1.2900 psychological mark, following a softer-than-expected UK CPI inflation print. According to the UK’s Office for National Statistics (ONS), annual CPI inflation cooled to 2.8% in February, down from 3.0% in January and below the consensus estimate of 2.9%, triggering pressure on the British Pound just ahead of the UK Spring Budget Report.

🔍 GBP/USD Technical Analysis – March 27, 2025

Current Price: 1.2905
RSI (4H): Below 50 – signaling waning bullish momentum
Key Support Levels:
- 1.2870 – 20-day SMA / lower edge of ascending channel
- 1.2800 – 200-day SMA
Resistance Levels:
- 1.2960 – 50-period SMA
- 1.3000 – Psychological barrier / mid-channel
- 1.3040 – Static resistance

A break below 1.2870 could pave the way toward the 1.2800 handle, marking a significant bearish shift. On the upside, a recovery above 1.2960 could revive buying interest, with eyes on the 1.3000–1.3040 resistance zone.

📊 What’s Moving GBP/USD?

Despite kicking off the week with strength, GBP/USD gave up gains after stronger-than-expected US data on Tuesday. The S&P Global US Composite PMI jumped to 53.5 in March, signaling robust growth across services and manufacturing, and bolstering demand for the US Dollar.

Later today, markets will focus on the US Consumer Confidence Index for March. A notable dip could dent the Greenback and provide support for GBP/USD in the short term.

🧾 Eyes on the UK Spring Budget Report

The UK Spring Budget Report 2025 is scheduled for Wednesday, with Chancellor Jeremy Hunt expected to outline fiscal policy measures and economic projections. Market participants are also keenly listening to BoE Governor Andrew Bailey, who noted on Monday that raising the UK’s potential growth rate remains a critical challenge. Any signals on tax cuts, spending, or inflation management could significantly impact GBP sentiment.

📌 Bottom Line

GBP/USD remains under pressure as softer UK inflation data reinforces the likelihood of future Bank of England rate cuts, while upbeat US data boosts the Dollar Index (DXY). Traders should brace for increased volatility ahead of the UK Budget Statement and key US data releases.

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Hamza Shah