GBP/USD moves below 1.3000, downside seems limited as US Dollar remains vulnerable

GBP/USD could see further gains as the US Dollar may struggle amid rising economic concerns in the United States.

Markets widely anticipate that the Fed will keep its current policy stance unchanged on Wednesday.

Traders expect the Bank of England to hold interest rates steady at its policy meeting on Thursday.

GBP/USD retreats after gaining in the previous session, hovering around 1.2970 during Asian trading on Tuesday. The pair faces pressure as the US Dollar (USD) attempts to recover losses from the last two sessions. However, downside movement may be limited, as the Greenback remains vulnerable amid rising trade tensions and growing economic concerns in the United States (US).

The US Dollar Index (DXY), which tracks the USD against six major currencies, trades positively around 103.50 at the time of writing. However, the US Dollar could further lose ground as weak US economic data and Trump’s tariff threats add to investor uncertainty.

February’s US Retail Sales rose less than expected, raising concerns about a potential slowdown in consumer spending. Markets widely expect the Federal Reserve (Fed) to maintain its current policy stance when it concludes its two-day meeting on Wednesday.

Data from the US Census Bureau on Monday showed that Retail Sales increased by 0.2% month-over-month in February, falling short of the expected 0.7%. This followed a revised -1.2% decline in January (previously -0.9%). On an annual basis, Retail Sales grew by 3.1%, down from the revised 3.9% in January (previously 4.2%).

The GBP/USD pair could find additional support as the Pound Sterling (GBP) strengthens on expectations that the Bank of England (BoE) will maintain its interest rates at Thursday’s policy meeting. This cautious stance aims to balance sluggish economic growth with persistent inflation risks. In February, the central bank lowered rates to 4.5% and revised its 2025 growth forecast downward to 0.75%, citing concerns over tax increases and global trade uncertainties.