GBP/USD Price Forecast: Holds a mildly bullish bias near 1.3500 despite subdued RSI momentum

The GBP/USD pair is currently trading near 1.3500, holding a modestly bullish outlook despite limited Relative Strength Index (RSI) momentum. Traders are eagerly anticipating Bank of England Governor Andrew Bailey's speech and forthcoming US August jobs data on Friday for further support. Earlier this week, Federal Reserve Chair Kevin Warsh delivered hawkish comments at the Jackson Hole meeting, fueling expectations of a rate hike later this month.

This sentiment stems from Warsh's resolve to bring inflation back to the 2% target, with the potential for additional rate hikes. While UOB analysts acknowledge the heightened risks of policy tightening this year, they also caution that Warsh's statements may not necessarily translate into action. On the UK side, BoE policymaker Catherine Mann reported signs of stronger economic growth and a stabilised labour market.

However, inflation remains slightly above expectations. Financial markets had priced a BoE rate hike by year-end at around 15%, with only a 10% probability of an increase at the September meeting. Scotiabank strategists emphasize the absence of significant domestic political factors, suggesting sentiment, particularly politically-related sentiment, plays a crucial role in driving Pound Sterling strength since the arrival of Prime Minister Jeremy Burnham in late June.

Technical analysis indicates a mild bullish bias for GBP/USD, as the pair trades above the 100-day Simple Moving Average and the lower Bollinger band, indicating underlying demand on pullbacks. However, the price remains below the middle Bollinger band, and the 14-day Relative Strength Index stands at 46.8, suggesting subdued momentum.

The first resistance level is the Bollinger middle band at 1.3550, with a stronger barrier at the May 8 high of 1.3637, leading to the upper Bollinger band near 1.3665. On the downside, key support lies at the 100-day SMA and the lower Bollinger band at 1.3440, forming a tight demand zone that could signal a deeper corrective phase if broken.