The GBP/USD pair extended its decline during Friday's Asian trading session, marking a third consecutive day of losses, with the exchange rate touching its lowest level in two weeks.

This movement follows dovish signals from the Bank of England's recent meeting, which prompted markets to reassess the outlook for monetary policy. Concurrently, the US dollar continued to strengthen, supported by safe-haven demand and interest rate expectations, collectively driving the pair lower.

Regarding the US dollar, news of Kevin Warsh's nomination as the next Federal Reserve Chair has sparked speculation about a potential shift towards a less dovish monetary policy stance. Amid heightened market volatility, the appeal of the US dollar as the world's primary reserve currency has increased.

The US Dollar Index climbed to its highest level since late January, becoming a significant factor pressuring the GBP/USD pair. In contrast, the British pound was clearly weighed down by the Bank of England's policy stance.

The Bank of England's Monetary Policy Committee voted 5-4 to keep interest rates unchanged at its February meeting, revealing heightened internal divisions regarding the policy outlook. Simultaneously, the central bank's policy statement explicitly hinted at potential room for interest rate cuts in the future should inflation continue to slow.

Bank of England Governor Andrew Bailey stated during the post-meeting press conference that inflation could return to target levels sooner than previously anticipated. These remarks triggered an immediate market reaction, with traders beginning to price in expectations for a cumulative 50 basis points of rate cuts by the Bank of England this year, further diminishing the pound's attractiveness.

Although markets also anticipate that the Federal Reserve still has room for further rate cuts in 2026, the US dollar has shown greater resilience in the short term, supported by interest rate differentials and safe-haven demand. This fundamentally reinforces the downward logic for the GBP/USD pair.

From a daily chart perspective, the GBP/USD pair broke below its previous consolidation range following the Bank of England's decision, confirming a further downtrend. The exchange rate has effectively breached support from short-term moving averages, and the moving average system has begun to diverge downwards, indicating strengthening bearish momentum.

The 1.3500 level currently constitutes a key psychological barrier. A decisive break below this level on a daily closing basis would make the 1.3420–1.3450 range the next significant support zone. A breach of this zone could potentially lead to a test of the 1.3350 area.

On the upside, the 1.3600 level presents the first notable resistance, coinciding with the lower boundary of the previous trading range. Stronger resistance is situated near the 1.3700 level. Only a sustained move back above this area could potentially alleviate the current weak structure.

Overall, with bearish fundamentals and a weakening technical structure converging, the GBP/USD pair still faces further downside pressure in the short term.

The pound's retreat is not driven by a single event but is the result of the combined effect of a rapid shift in Bank of England policy expectations and a phase of US dollar strength. Market pricing for a UK rate cut within the year has clearly been brought forward, putting the pound under relative pressure among major currencies.

In the absence of new positive factors, the GBP/USD pair is more likely to maintain a weak trading pattern in the near term. The key to subsequent price action will depend on whether UK inflation data continues to decline and whether the US dollar's strength can be sustained.