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British Pound falters near 1.3400 as US business strength lifts DollarThe Pound Sterling retreats by some 0.16% versus the US Dollar on Friday as US business activity expands, while consumer sentiment worsens, with households complaining about high prices. The GBP/USD trades at 1.3366.

Tensions in the Middle East remain high. US President Trump said that “we could end the war with Iran very quickly”, adding that “do we want to finish it or let it within is the question.” He reassured that the US controls the Strait of Hormuz. Read more...

British Pound: BoE tightening expectations questioned – BBHElias Haddad at Brown Brothers Harriman notes GBP/USD is weaker on broad Dollar strength, even as UK PMI beats and supports expectations for a 25 bps BOE hike to 4.00% in November. He argues the swaps market is overpricing future tightening, citing below-capacity growth, weak real wages, a near-neutral policy rate and likely fiscal restraint as headwinds for the Pound.

"GBP/USD is down on broad USD strength while EUR/GBP dropped to its lowest level since May 2025. UK October PMI beat expectations, cementing bets on a 25bps BOE policy rate hike to 4.00% on November 5." Read more...

British Pound underperforms despite upbeat UK flash PMI reportThe British Pound (GBP) is down against its major currency peers on Friday, trading 0.1% lower at around 1.3380 against the US Dollar (USD) during the European trade. The British currency faces pressure even as United Kingdom (UK) flash S&P Global Purchasing Managers’ Index (PMI) data for October has come in surprisingly stronger.

The PMI report showed that the overall business activity remained robust due to a significant growth in both manufacturing and the service sector output. The Composite PMI arrives at 53.1, significantly higher than final reading of 52.0 in September. The data was expected to come in lower at 51.8. Read more...

The Pound-Dollar could hold above $1.34 if UK activity remains resilient, although weaker domestic data may temper expectations for further BoE tightening. The Pound to US Dollar (GBP/USD) exchange rate climbed to a five-week high on Thursday, with Sterling continuing to benefit from expectations of further Bank of England (BoE) interest rate increases.

At the time of writing, GBP/USD was trading at $1.3407, having eased from an earlier peak of $1.3418 but remaining modestly higher on the day.

Latest-Exchange Rates:

Pound to Dollar (GBP/USD): 1.33793 (-0.18%)

Euro to Dollar (EUR/USD): 1.120073 (-0.18%)

Dollar to Yen (USD/JPY): 156.98193 (+0.29%)

DAILY RECAP:

The Pound (GBP) retained support from stronger-than-expected UK economic data released earlier in the week.

Tuesday's labour market report revealed an unexpected decline in unemployment, suggesting that employment conditions remain more resilient than economists had anticipated.

Wednesday's consumer price index (CPI) provided further encouragement for Sterling, with inflation accelerating more sharply than forecast.

The combination of falling unemployment and persistent inflation strengthened expectations that the Bank of England will raise interest rates at its November policy meeting.

Investors have also been considering the possibility of additional tightening during 2027, helping to maintain demand for the Pound despite concerns over the UK's economic outlook.

Nevertheless, Sterling struggled to extend its advance beyond Thursday's five-week high, with traders reluctant to push GBP/USD substantially higher ahead of another round of domestic economic releases.

The US Dollar (USD), meanwhile, remained under pressure as declining US Treasury yields reduced support for the American currency.

Lower bond yields have made Dollar-denominated assets relatively less attractive, particularly as markets reassess the outlook for Federal Reserve monetary policy.

Political uncertainty ahead of the US midterm elections also weighed on sentiment towards the 'Greenback'.

The contrast between UK and US interest rate expectations has become an increasingly important influence on GBP/USD.

While markets anticipate another Bank of England rate increase in November, the Federal Reserve is widely expected to leave borrowing costs unchanged at its next meeting.

This divergence has helped Sterling recover against the Dollar, although the outlook remains sensitive to incoming economic data.

Near-Term GBP/USD Forecast: Weak UK Retail Sales Could Test $1.34 The Pound to US Dollar exchange rate could face renewed selling pressure as investors assess the latest UK retail sales figures and preliminary October purchasing managers' index (PMI) surveys.

September's retail sales figures showed volumes contracting by 0.4%, a sharper decline than the 0.1% fall economists had anticipated.

The disappointing reading raises concerns that elevated household costs and higher borrowing rates are beginning to weigh more heavily on consumer spending.

Attention will now turn to the October PMI figures, which are expected to indicate slower activity across both the manufacturing and services sectors.

Further evidence of weakening economic momentum could temper expectations for an extended Bank of England tightening cycle, potentially limiting Sterling's recent gains.

For GBP/USD, the $1.3400 level remains an important near-term reference point after Thursday's advance to $1.3418.

A sustained move above the recent high could encourage further Sterling buying, while disappointing UK activity figures may prompt a retreat below $1.3400.

Across the Atlantic, the latest US PMI surveys could also influence trading if they reveal a slowdown in private-sector activity.

The University of Michigan's final October consumer sentiment index will provide another indication of household confidence.

A weaker reading could reinforce expectations that the Federal Reserve will remain on hold, potentially limiting any recovery in the US Dollar.

British Pound Technical Outlook: GBP/USD Short-Term Trade Levels
GBP/USD has rallied more than 2% from the October low, reaching its highest levels in over five weeks.
A bullish outside-week reversal fueled a break above the monthly opening range, strengthening the near-term recovery.
The advance is now confronting a major technical resistance confluence, with the 200-day moving average posing the next significant hurdle.
Failure to clear resistance would leave Sterling vulnerable, with the October lows remaining critical to the broader outlook.
U.K. and U.S. PMI releases headline near-term event risk ahead of next week's highly anticipated Fed decision.
Resistance 1.3406, ~1.3433, 1.3465/74 (key) - Support 1.3353, 1.3302 (key), 1.3245
Sterling has regained its footing following last month's sharp decline, with the latest advance marking a meaningful shift in the near-term technical picture. GBP/USD has rallied in five of the past six sessions, with bulls now confronting a pivotal resistance hurdle that could determine whether the recovery has further to run. Attention turns to Friday's preliminary U.K. and U.S. PMI releases before next week's Federal Reserve decision, with the reaction in Treasury yields and the dollar likely to play an important role in shaping GBP/USD direction into month-end. Battle lines drawn on the GBP/USD short-term technical charts.

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Sterling technical setup and more. Join live on Monday’s at 8:30am EST.

British Pound Price Chart – GBP/USD Daily

Chart Prepared by Michael Boutros, Sr. Technical Strategist; GBP/USD on TradingView

Technical Outlook: In last month’s British Pound Short-term Outlook we noted that GBP/USD had, “declined in four of the past five weeks, with the latest selloff driving Sterling below the 200-day moving average for the first time since July... From a trading standpoint, rallies would need to be limited to 1.3408 IF price is heading lower on this stretch with a close below 1.3302 needed to fuel the next major leg of the decline.” Sterling broke lower the following day, extending its decline to nearly 3.2% from the September high before rebounding last week from key support at 1.3140—a level defined by the May and August 2025 lows and the June 2026 low.

An outside weekly reversal last week has broken through the monthly opening range highs with the advance extended more than 2.1% off the yearly low. The rally is now testing resistance for a third consecutive day at the 50% retracement of the August decline near 1.3406 and the focus is on possible inflection off this level into the close of the week.

British Pound Price Chart – GBP/USD 240min

Chart Prepared by Michael Boutros, Sr. Technical Strategist; GBP/USD on TradingView

Notes: A closer look at Sterling price action shows GBP/USD trading within the confines of an ascending pitchfork extending off the October lows. Initial support rests at the 23.6% retracement of the monthly advance at 1.3353 which converges on the median line today. Subsequent support rests at the May low at 1.3302 with a break / daily close below the 61.8% retracement at 1.3245 needed to put the bears back in control.

The 200-day moving average now converges on the 75% parallel near ~1.3433 and a break / close above this slope is needed to fuel the next leg of the rally towards a key pivot zone at the February low-day close (LDC) and the 2026 yearly open at 1.3465/73- look for a larger reaction there IF reached. Subsequent resistance is eyed at the July high at 1.3558.

   
       

Bottom line: GBP/USD has rebounded sharply off major technical support with the rally now extending to the highest levels in more than five-weeks. From a trading standpoint, losses should be limited to 1.3353 IF price is heading higher on this stretch with a close above the 200-day moving average needed to fuel the next leg of the uptrend.

GBP/USD event risk into the weekly close centers on Friday’s preliminary U.K. and U.S. PMIs, but attention will increasingly shift toward next Wednesday’s Federal Reserve decision. A November Bank of England hike is already largely priced following this week’s stronger employment and inflation data, leaving limited room for further sterling gains from BoE expectations alone. The U.K. Budget is also due next Wednesday, but the Fed will likely remain the primary catalyst, with markets focused on whether Kevin Warsh signals that persistent inflation warrants further tightening or endorses a pause. Stay nimble into the release and watch the weekly closes for guidance. Review my latest British Pound Weekly Forecast for a closer look at the longer-term GBP/USD technical trade levels.

Key GBP/USD Economic Data Releases

Active Short-term Technical Charts
Euro Short-term Outlook: EUR/USD Rebound Faces Critical Test After Trend Break
Gold Price Short-term Outlook: XAU/USD Holds Critical Support as Breakout Nears
Canadian Dollar Short-term Outlook: USD/CAD Five-Week Rally Hits a Wall at Major Resistance
Japanese Yen Short-term Outlook: USD/JPY Breakout Risk Builds Below 200-Day Average
Australian Dollar Short-term Outlook: AUD/USD Rebound Challenges September Downtrend
US Dollar Short-term Outlook: USD Four-Week Rally Stalls Below Key Resistance
Swiss Franc Short-term Outlook: USD/CHF Rebound Tests Broken Uptrend
--- Written by Michael Boutros, Senior Technical Strategist

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Summary:

The Federal Reserve and the European Central Bank are both expected to hold rates in October, cushioning the pound against new onslaught.
Concerns about stagflation in the UK and high energy prices are an existential threat to the GBP
Upcoming UK budget announcement will reveal the level of success of fiscal management and could impact the pound
The British pound’s been on a strong run. On Wednesday, sterling traded near $1.339, almost hitting a one-month high. So far this October, it’s gained almost 2% against the euro and close to 1% against the US dollar.

The pound’s now trading above 1.3400 against the dollar and testing multi-month highs near 1.1850 against the euro. This climb largely comes from changing expectations around central bank interest rates. The GBP/EUR performance against the this month is the best since May 2023. But can this upward trend last?

Where Is GBP Getting Its Strength From?
The pound’s gains stem from solid economic data and high expectations for Bank of England (BoE) interest rate hikes.

UK unemployment fell to 4.7%, and annual regular wage growth held steady at a healthy 3.7%. Strong wage growth like this supports continued consumer spending, which makes the central bank’s job of controlling inflation harder.

Economic growth played a part too. An unexpectedly strong UK GDP report helped pull sterling up from its year-to-date low of 1.3137 against the dollar. The economy grew 0.1% in August, according to data from the Office for National Statistics, exceeding the consensus forecast 0.1%

Will the Pound Hold After Fed and ECB Decisions?
Upcoming central bank meetings could bring some volatility. Most economists expect the Federal Reserve to keep interest rates steady, likely between 3.75% and 4.00%, at its late October meeting, though another hike in December is not out of the question.

The Fed’s decision comes on October 28th. Since an October rate hike now seems improbable, the commentary released with it will matter more than the rate decision itself. A hawkish statement from them could really boost the dollar and pressure GBP/USD.

Similarly, the European Central Bank is also expected to keep rates steady on October 29th. They’ll likely wait to review more economic data before making any policy changes in December.

The pound might hold its ground better against the euro, especially if worries about Eurozone fiscal policy persist. But technical signals hint the currency could be overbought after its strong run in September and October, possibly setting up a short-term correction.

Just a pause in rate hikes from both the Fed and ECB shouldn’t slow sterling’s upward climb much. Still, if there’s any strong sign of more tightening in December, that could shrink the interest rate gap that has helped the pound.

Potential Risks for Sterling
Even with recent gains, big risks remain. The upcoming UK Budget announcement will be a significant focus. If it hints at poor fiscal management or more government borrowing than expected, that could hurt the gilt market and push the currency down. Investors are still wary about debt sustainability given the recent volatility in bond yields.

Concerns about stagflation also persist. Inflation is now outpacing the BoE’s forecasts, and a slowdown in UK economic activity could cap any more gains for the pound.

Persistent geopolitical tensions keep impacting energy prices and complicating the inflation outlook. A big jump in oil or gas costs might force the BoE to hike rates more aggressively, which could then slow economic growth. Conversely, if the BoE holds back, it might erode trust in its inflation-fighting capabilities.

Additionally, the Chancellor’s upcoming budget also brings policy risks. Big tax increases or surprisingly low government borrowing could slow down domestic economic activity. That might prompt the BoE to hit pause on its monetary tightening cycle sooner than expected.

What recent UK data has most supported the pound?

Lower-than-expected unemployment at 4.7% and stronger wage growth of 3.7% recently made a Bank of England rate hike next month feel more likely.

What are markets expecting for the upcoming Fed and ECB meetings?

Markets largely expect both the Fed and ECB to keep rates steady in late October. Any further action will probably wait until December, depending on new data.

Why does the UK Budget pose a risk to sterling?

If the UK Budget signals weaker fiscal discipline or bigger borrowing, it could rattle gilt markets. This might undo recent currency gains, especially because debt sensitivity is still high.

UK annual CPI rose to 3.5% in September from 3.1% in August, exceeding the 3.4% forecast. Core inflation accelerated to 2.8%, while services inflation reached 3.7%. This increases the possibility of tighter monetary policy.

The interest rate remains at 3.75%, with markets expecting it to rise to 4.00% at the 5 November meeting. Committee member Megan Greene also warned that inflation risks from the energy shock could be higher than previously thought.

Rising oil and fuel prices are increasing inflationary pressure in the UK while also enhancing the US dollar’s appeal amid geopolitical uncertainty.

The unexpected rise in UK inflation is supporting the pound by increasing expectations of a Bank of England rate hike. At the same time, demand for the US dollar as a safe-haven asset and Middle East tensions may limit GBP/USD’s upside. The pair’s next moves will depend on changes in interest rate expectations in both countries and developments in the geopolitical situation.

Technical Analysis

On the H4 chart, GBP/USD completed its upward correction at 1.3405, creating the conditions for a resumption of the downward move. The main scenario for today is a decline towards 1.3326. After reaching this level, a local correction towards 1.3355 is possible, followed by a continuation of the decline towards 1.3255. A break below this support would open the way for a downward wave towards 1.3137 and then 1.3062.

The MACD histogram remains in positive territory near local highs, indicating that upward momentum persists. However, with resistance at 1.3405 nearby, the likelihood of a reversal and a downward correction increases. A weakening of the indicator’s positive momentum is needed to confirm this scenario.

On the H1 chart, GBP/USD moved up from 1.3137 to 1.3405 and is now consolidating around 1.3370. A break below the range is expected today, with the first target at 1.3326. This would be followed by a decline towards 1.3253 and 1.3235. A break below these levels would strengthen sellers’ positions and create the conditions for the downward move to continue.

The Stochastic oscillator is in neutral territory near 50, indicating weakening upward momentum. A downward turn in the signal lines would confirm the correction, with scope for the indicator to move into oversold territory. An alternative scenario envisages consolidation above 1.3405, which would temporarily invalidate the priority downward scenario and open the way for a further recovery.

Conclusion The pound has found support from stronger-than-expected UK inflation, which has increased expectations of a Bank of England rate hike at the 5 November meeting. However, the US dollar’s safe-haven appeal amid Middle East tensions and elevated oil prices continues to limit GBP/USD’s upside. Technically, the pair has completed its upward correction at 1.3405, with the main scenario pointing to a decline towards 1.3326, 1.3255 and potentially 1.3137. A break below support would increase the potential for further declines, while consolidation above 1.3405 would temporarily invalidate the priority downward scenario and open the way for a further recovery. The upcoming BoE meeting and geopolitical developments will be the key drivers of the pair’s next move.

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Summary:

The latest rally of around 2% from the October low has taken GBP/USD to highs near 1.3375 on Wednesday as UK inflation data Introduction The latest rally of around 2% from the October low has taken GBP/USD to highs near 1.3375 on Wednesday as UK inflation data gets digested by the market. As a reminder, cable has defended the 1.3194 area September seven times this month .

Our earlier warning that sterling’s bounce looked like a possible bull trap has so far been tested rather than confirmed.

Key Support and Resistance Levels First resistance is at the 100-day simple moving average of 1.3390, then 1.3400 to 1.3406 The primary near-term upside objective is at 1.3470 to 1.3474 (61.8% Fibonacci retracement, it aligns with regards both as the.250 extension and a swing high), with additional resistance proximate to the July/August highs of 1.3558 just above that region* On the flip side, support starts at 1.3365 (upper Bollinger Band), followed by 1.3302 and 1.3264, the October open. You are 1.3194 in critical support and the bulls’ line in the sand is the October low at 1.3135.

Indicators and Pattern After the rebound Daily momentum has turned positive and price is riding up the upper Bollinger Band notably hinting at extensions in near-term. But the 100-day average remains a key hurdle and keeps the wider bias bearish. Investtech sees the pair trapped in a horizontal rectangle between 1.31 and 1.36, so a clear crossing either side should do away with uncertainty for potentially contributing to where price is next headed.

 The speed of earlier losses, when GBP/USD fell to a six-week low on UK borrowing worries, shows how quickly this range can be tested.

Fundamental Drivers Event risk is high. High UK inflation or labour market figures would bolster Bank of England tightening bets, while a downside surprise could re-ignite rate cut expectations. On the dollar side, Federal Reserve pricing remains pivotal, as explained in the Fed hiked but the dollar softened. Resilient UK labour data have supported sterling recently.

Trading Scenarios Bullish scenario: a daily close above 1.3406 would target 1.3470, then 1.3558. Bearish scenario: a drop below 1.3264 would invalidate the breakout and expose 1.3194, while a close beneath that opens 1.3135 and 1.3092. For the wider picture, see GBP/USD’s resilient comeback.

Risk Management and Confirmation Cable’s short term bounce has left Cable stretched already so chasing the move near resistance is a risk. So a pullback toward 1.3302 or 1.3264 that holds should be more supportive of demand, providing bulls with a lower-risk entry (stops beneath 1.3194). A daily close below 1.3264 would strengthen the argument against bears that this is just a view correction in the scope of the larger downtrend. As the pair is inside a large rectangle, patience is probably key: the first break usually fails and a retest of resistance is typically more reliable signal. Accompanying the chart, watch the US dollar index and Federal Reserve commentary since the pound tends to react to dollar moves as much if not more than domestic data.

The bottom line is that sterling tests restores but remains facing a congested band of resistance. Do not take a position until you see a close above 1.3406 or below 1.3264. The Bank of England and Federal Reserve are both data dependent, so expect fireworks out of each major release from here on out in the week ahead. Shorter term traders are advised to play small and respect stop changes at all costs.

The British Pound (GBP) trades 0.1% higher at around 1.3395 against the US Dollar (USD) during the European trading session on Wednesday. The British currency strengthens as hotter-than-expected United Kingdom (UK) Consumer Price Index (CPI) data for September has prompted hawkish Bank of England (BoE) expectations.

Earlier in the day, the Office for National Statistics (ONS) has reported that the headline CPI grew by 3.5% Year-on-Year (YoY), faster than 3.4% estimates and the August reading of 3.1%. The core CPI – which strips off volatile components of food, energy, alcohol and tobacco – also grew stronger by 2.8% YoY vs. estimates of 2.7% and the previous release of 2.6%.

BoE path seen as firmly higher as markets price multiple UK rate hikesAnalysts at Societe Generale argue that the near-term policy path is now largely predetermined, with “for the BoE, a 25bp increase bank rate in November is locked in.” They add that money markets are already discounting a more extended tightening cycle, noting that they are “aggressively priced for another three hikes by next summer to 4.75% unless the progress in inflation stalls and the economy extends its resilient performance into 2027.”

Going forward, investors will focus on the UK Retail Sales data for September and flash S&P Global PMI data for October scheduled for Friday.

Meanwhile, the US Dollar is under pressure due to concerns over United States (US) Artificial Intelligence (AI)-growth optimism and expectations that the Federal Reserve (Fed) will keep interest rates steady in the policy meeting later this month.

GBP/USD Technical Analysis

In the daily chart, GBP/USD trades at 1.3391. The pair holds above the 20-period exponential moving average (EMA) at 1.3303, keeping the near-term tone constructive as price extends its recovery from recent lows. The Relative Strength Index (RSI) at 57.5 leans to the bullish side without yet signaling overbought conditions, suggesting room for further upside while the pair remains supported by the reclaimed short-term trend baseline.

On the downside, initial support is seen at the 20-day EMA at 1.3303, with the latest close at 1.3391 acting as a nearby pivot level for any corrective pullbacks. Looking up, the pair could enter a fresh upside leg if it manages a decisive break above 1.3410.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Economic Indicator

Consumer Price Index (YoY)
The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is the inflation measure used in the government’s target. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

Read more.

The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.

The British pound has rallied to a four-week high as resilient UK employment data and hawkish Bank of England expectations support sterling ahead of today's inflation report. With a November BoE rate hike almost fully priced in, it may require an upside inflation surprise to provide another tailwind. GBP/USD bulls are eyeing a break above the 200-day EMA, while GBP/AUD shows signs of a potentially larger bullish reversal.

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British Pound Strengthens Ahead of UK CPI as BoE Rate Hike Looms
UK Employment Resilience Keeps November BoE Hike on Track
The Bank of England (BOE) remains on track to hike in November after Tuesday's employment report provided further evidence of a resilient UK economy. Unemployment fell to 4.7% from 4.9% in September according to ONS, payroll employment rose by 13,000 in September, and regular wage growth reached 3.7% y/y, above expectations. That said, vacancies fell to 691,000, suggesting underlying labour demand remains subdued despite the headline improvement.

Money markets have almost fully priced in a 25bp hike to 4% on 5 November, with further tightening expected into 2027. BoE policymaker Megan Greene added to the hawkish narrative on Tuesday, warning that the risks of second-round inflation effects are greater than previously thought and reiterating the need for pre-emptive tightening. Her comments contrast with Governor Andrew Bailey's more cautious assessment that such pressures remain relatively subdued, highlighting divisions over how aggressively the BoE may need to respond.

Attention now turns to today's September CPI report, where headline inflation is expected to accelerate to 3.4% y/y from 3.1%. An upside surprise could reinforce sterling's interest-rate advantage, while softer inflation would challenge the extent of tightening currently priced into UK rates.

GBP/USD Technical Outlook: British Pound Eyes Further Gains
Sterling has rallied to a four-week high ahead of today’s inflation figures, fuelled by improving employment and wage data alongside scaled-back Fed rate bets. But GBP/USD bulls had to ride out a quick retest of the June low before the bullish reversal I hypothesised could get underway.

While resistance has been met around the 200-day EMA and 1.34 handle, the RSI (14) is back above 50 and nowhere near overbought. As we’re witnessing range expansion from a multi-week compression pattern at the end of a selloff, I suspect GBP/USD could have further to go to the upside. The RSI (2) warns of near-term exhaustion, though bulls may be seeking dips above 1.33 in anticipation of a break above the 200-day EMA.

Note the 1.3475 low and September VPOC at 1.3543 as potential upside targets for bulls.

Source: ICE, TradingView

GBP/AUD Technical Outlook: Inverse Head and Shoulders in Focus
Whether the inverted head and shoulders pattern on the weekly chart goes on to succeed remains to be seen, but it could take several weeks or months to play out if it does. Until then, I am focusing on whether we at least see the completion of the ‘right shoulder’ (RS) of the long-term bullish reversal pattern. This assumes a move higher towards the neckline around the June and March highs.

The daily GBP/AUD chart shows an explosive move out of a bull flag, though resistance was met around the 200-day EMA and monthly pivot point. Bulls could be seeking dips above the swing low around 1.859, though the monthly pivot point, high-volume node (HVN) and 1.90 handle also form a potential support zone to seek bullish reversal patterns.

Source: ICE, TradingView

Scotiabank strategists Shaun Osborne and Eric Theoret note GBP/USD is little changed as markets await UK labour data, Consumer Price Index (CPI) and next week’s budget, where investors expect Chancellor Healey to maintain fiscal discipline. Technically, the British Pound (GBP) has staged a strong bullish weekly reversal from the lower end of its sideways range, with scope to retest 1.3650/75 and initial resistance at the 200-day moving average near 1.3435.

Pound eyes retest of range top
"The GBP is little changed on the session. Spot is marking time ahead of tomorrow’s jobs and wage, with CPI released on Wednesday."

"Next week’s budget is starting to attract a little attention as well, with local reports suggesting that investors are banking on Chancellor Healey maintaining a steady hand on spending and borrowing to boost Gilts."

"Bullish – Solid GBP gains from Wednesday’s post-US CPI low drove a huge bullish weekly reversal on the chart (outside range week)."

"Follow through demand so far has been limited but the scale of last week’s rebound from the weekly low and net gain is hard to ignore."

"With recent price action basing around the low point of the sideways range in place since April, the pound’s solid gain last week should put spot on course to retest the upper end of the range (1.3650/75) in the coming weeks."

"Initial, key resistance sits at 1.3435 (200-day MA)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

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The British Pound (GBP) trades marginally lower at around 1.3314 against the US Dollar (USD) during the European trading session on Monday, but is wobbling inside Friday’s trading range. The GBP/USD pair is expected to remain sideways as investors await key United Kingdom (UK) employment data for quarter ending August and the Consumer Price Index (CPI) data for September, which are scheduled for Tuesday and Wednesday, respectively.

According to estimates, the ILO Unemployment Rate increased to 5% from 4.9% in three months ending July. Average Earnings Including Bonuses drops to 3.8% Year-on-Year (YoY) from the previous reading of 3.9%.

Economists at Deutsche Bank expect UK price pressures to re-accelerate into September, projecting that inflation will “push to its highest rate all year.” They look for headline CPI to rise to “3.49% y-o-y, with core CPI pushing to 2.74% y-o-y.” Within the basket, Deutsche Bank also anticipates a renewed pickup in services, with “Services CPI, we expect, will also rise, picking up pace to 3.71% y-o-y on stronger base effects.”

The UK data will likely have a significant impact on Bank of England’s (BoE) interest rate expectations.

Meanwhile, the US Dollar trades higher as social protests in France amid higher cost of living have boosted borrowing costs for government. 10-year French bond yields holds onto Friday’s gains at around 4.87%.

GBP/USD Technical Analysis

In the daily chart, GBP/USD trades at 1.3317, holding a mildly bullish near-term tone as spot remains above the 20-day exponential moving average (EMA) at 1.3285. The short-term trend bias is underpinned by this nearby dynamic support, while the Relative Strength Index (14) around 51 suggests neutral-to-positive momentum rather than overextension in either direction.

On the downside, initial support is located at the 20-day EMA near 1.3285, while the major support lies at 1.3140. On the upside, the Friday's high at 1.3372 seems the key hurdle for the pair.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Economic Indicator

Consumer Price Index (YoY)
The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is the inflation measure used in the government’s target. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

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The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.

The GBP/USD pair holds steady around 1.3330 during the early European trading hours on Monday. Traders continue to assess the US interest rate path after Federal Reserve (Fed) Chair Kevin Warsh’s remarks. All eyes will be on the UK jobs data on Tuesday. On Wednesday, the UK Consumer Price Index (CPI) inflation report will be in the spotlight.

During the 2026 IMF-World Bank annual meetings in Bangkok on Friday, the Fed Chairman said that he does not "prejudge" interest-rate decisions, giving no preview of whether the central bank will hike or hold short-term rates steady at its upcoming October 27-28 meeting.

Fed funds futures are pricing an implied 84% chance that the US central bank stays on hold at its next two-day meeting on October 28, according to the CME FedWatch tool.

UK economic data later this week are likely to help seal the deal on the first rate hike from the Bank of England (BoE) in over three years in November. “We expect a 25-basis-point hike at the central bank’s next meeting in November. We also see another move in February,” said Bloomberg Economics chief UK economist Dan Hanson.

Pound resilience masks growing UK consumer strains and rate repricing risksAnalysts at MUFG note that the Pound “continues to show resilience,” with recent economic data reinforcing expectations of further monetary tightening by the BoE. They point out that the Pound is “roughly unchanged versus the US Dollar since the end of June,” with only the energy-linked CAD and NOK outperforming, alongside the Yen, which has been supported by “yen buying intervention by the MoF, with assistance from the US.” In this context, MUFG argues that “the pound has done well on the back of improving sentiment and evidence of economic resilience.”

That resilience has been underpinned by stronger-than-expected growth figures. MUFG highlights that “the GDP data again was stronger than expected – the m/m gain of just 0.1% was modest but still better than expected, helping the 3mth/3mth rate to 0.7%, 0.2ppt stronger than expected.” They add that the three‑month gain “was helped by services activity,” although the “one-month reading was flat in August and could be a sign of weakening momentum.” Within services, the breakdown “showed consumer-facing weakness,” while a Bloomberg Intelligence survey “indicated vulnerabilities that could see a slowing in the months ahead.”

Those vulnerabilities are already showing up in credit dynamics. MUFG flags that the BoE’s quarterly Credit Conditions Survey “revealed an increase in defaults on credit card debt for the sixth consecutive quarter underlining the increased strains on UK consumers.” Despite this, “these exposures are increasing with consumer credit up GBP 2.5bn in August to a new record high.” MUFG cautions that “if rates remain around these levels, it’s very likely that these figures will deteriorate further in the final quarter of the year.”

As a result, the bank sees a tension between the recent data and the outlook. “So while the backdrop of the economic data has been positive, the outlook does point to increasing risks,” MUFG writes. They note that “the OIS market indicates 100bps of tightening is priced by next September” but reiterate that “we continue to doubt the BoE delivering that, especially following the comments from Chief Economist Huw Pill who stated this week that he is sceptical that the UK will require four 25bp rate hikes.” Even so, MUFG concedes that “it will be difficult for the markets to adjust lower given the global backdrop of higher rates.”

In their view, this leaves the Pound exposed if the global rate environment turns. “In circumstances of a broader move back lower in rates, UK rates could fall more notably,” they argue, warning that “the pound remains vulnerable to signs that recent economic resilience could be undermined by the notable move higher in yields.”

Bailey frustration on inflation keeps GBP supported but cautiousFXS Speechtracker scores this speech at 6.2, slightly below Governor Bailey’s historic 6.4 average, pointing to a marginally softer tone overall. Bailey’s frustration with above-target UK inflation and comments that the economy is “more resilient than we expected, not as strong as we need” lean mildly hawkish, as they keep the door open to maintaining restrictive policy for longer.

However, remarks that it is “too early to form strong views on the strength of 2nd round effects” and that such effects are “subdued” with businesses focused on cost cutting temper the hawkishness. For GBP, the mix suggests limited immediate upside, with support from ongoing inflation concerns but capped by caution over second-round dynamics and external risks such as Middle East-driven moves in UK gilt yields.

Technical Analysis: GBP/USD remains capped under the 100-day SMAIn the daily chart, GBP/USD holds below the 100-day simple moving average (SMA) and thus retaining a capped, mildly bearish near-term bias. Price is hovering just under the upper Bollinger Band, suggesting upside attempts are meeting supply, while the Relative Strength Index (RSI) at 52.4 has turned neutral, hinting that recent recovery momentum is losing traction rather than evolving into a sustained bullish trend.

On the topside, initial resistance level is aligned at the upper boundary of Bollinger Band around 1.3335, with a more meaningful barrier at the 100-day SMA at 1.3390. A daily close above this level could see a rally to the September 9 high of 1.3568. 

On the downside, the Bollinger middle band, a 20-day SMA now around 1.3250, offers the first layer of support ahead of the lower band near 1.3165. A breach of the mentioned level could expose the November 20, 2025 low of 1.3038.  

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Pound Sterling FAQs The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).

The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.

Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.

Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

Scotiabank analysts highlight that Bank of England Governor Bailey sees little evidence of second-round inflation effects and a more resilient UK economy, with markets still pricing a 25bp hike next month. Technically, GBP/USD has rebounded strongly from mid-week lows, forming a bullish weekly outside range and opening scope to retest the 1.3650–1.3675 area, with key resistance at 1.3435.

Pound recovery points to range highs"BoE Governor Bailey remarked that there was little evidence yet of second-round inflation effects in the UK while noting that the UK economy was more resilient than expected. The comments had no impact on OIS, with swaps still all but fully committed to a 25bps rate hike early next month."

"Elsewhere, Chancellor Healey will reportedly increase the corporation tax bank surcharge from 3% to 8% as part of next week’s budget in a bid to shore up UK public finances."

"Bullish – Solid GBP gains from Wednesday’s post-US CPI low have driven Cable back to the mid-1.33 area. A clear, bullish reversal is forming on the weekly chart as a result (a major outside range week)."

"With recent price action basing around the low point of the sideways range in place since April, the pound’s rebound suggests gains may extend to retest the upper end of the range (1.3650/75) in the coming weeks. Initial, key resistance sits at 1.3435 (200-day MA)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

GBP/USD Price Forecast: Fits fresh monthly high as bulls retain control above 1.3265The GBP/USD pair attracts some follow-through buyers for the second straight day on Friday, recovering further from the year-to-date low, around the 1.3135 region, touched earlier this week. The momentum lifts spot prices to the 1.3325 area, or a fresh monthly peak during the early European session, and is supported by a combination of factors.

Despite hot US inflation figures, investors seem convinced that the Federal Reserve (Fed) will keep rates unchanged at the next policy meeting, later this month. Expectations were reaffirmed by Fed Chair Kevin Warsh's neutral remarks earlier today, which, along with the recent sharp decline in US bond yields, dragged the US Dollar (USD) to a one-and-a-half-week low. The British Pound (GBP), on the other hand, continues to be underpinned by hawkish remarks from Bank of England (BoE) Governor Andrew Bailey and stronger UK Gross Domestic Product (GDP) data, which further contributes to the bullish tone surrounding the GBP/USD pair. Read more...

British Pound gathers strength to near 1.3300 on Fed policy uncertaintyThe GBP/USD pair gains traction to around 1.3300 during the early European trading hours on Friday. The British Pound (GBP) edges higher against the US Dollar (USD) amid hawkish remarks from Bank of England (BoE) Governor Andrew Bailey and stronger UK Gross Domestic Product (GDP) data.

Bailey said on Friday that soaring energy prices so far appear to be having limited wider effects on British prices, but it is too soon to draw firm conclusions about how strong such second-round effects will be. Read more...

The intermarket setup I’m watching includes:

EUR/USD holding above the psychological 1.11 support level, alongside a daily RSI rebound from oversold conditions last seen in 2015. The recovery remains restrained below 1.1260.

GBP/USD holding above the 1.3130 support and within the boundaries of a sideways consolidation that has been in place since November 2025.

The DXY pulling back from an 8-month resistance and the psychological 103 level after daily RSI reached overbought conditions last seen in 2023.

Together, these signals highlight key confirmation and invalidation levels for potential rebounds across the FX market. The outlook remains sensitive to inflation and energy prices, with US CPI rising to 3.7% in September and crude oil holding in neutral-to-bullish territory above $90.

DXY Outlook: Weekly Time Frame – Log Scale

Source: TradingView

After forming a bearish divergence alongside daily RSI overbought conditions last seen in 2023, the DXY pulled back from the 103 resistance level and resistance connecting higher highs since March 2026. This may confirm potential bullish rebound setups in EUR/USD and GBP/USD.

For the DXY, the key confirmation zone for a sustainable bearish reversal is around 101–100.80. This area aligns with the rising support connecting higher lows from January to August 2026. A break below this support zone would strengthen the case for a neutral-to-bullish outlook across the currency pairs.

For now, the outlook remains neutral, given the risks from crude oil, geopolitics and inflation.

On the upside, a move back above 102.60 and 103 would reassert the bullish bias, with 103.50 and 105 as the next potential levels.

Dollar Pairs in Perspective: USD/CHF, USD/CAD, USD/JPY and DXY

Source: TradingView

Several short-term reversal setups across the major dollar pairs may help put the DXY’s pullback into perspective:

USD/CHF: Price is pulling back from the 2023–2026 support-turned-resistance zone, which also aligns with the target of an inverse head-and-shoulders pattern on the weekly chart, near 0.84.

USD/CAD: The pair has consolidated after briefly stretching above its yearly highs below 1.43. A break above the psychological 1.43 level would discard the bearish reversal setup.

USD/JPY: The pair is consolidating below 159, raising the risk of a double-top reversal on the four-hour chart.

The respective invalidation levels for these bearish reversal setups are 0.84 for USD/CHF, 1.43 for USD/CAD and 159 for USD/JPY. For the DXY, the key invalidation level is 103.

EUR/USD Outlook: Weekly Time Frame – Log Scale

Source: TradingView

EUR/USD is struggling to recover above the descending trendline near 1.1260, drawn across the lower lows from July 2025 to September 2026. Weekly RSI is rebounding from oversold conditions last seen in 2025, while daily RSI is recovering from oversold conditions last seen in 2015. These signals are lifting the potential for a sustainable bullish reversal, but price confirmation is still needed.

A break back above 1.1260 would bring the 1.1380–1.1400 zone into focus as the next key resistance. Clearing that area would strengthen the case for a move toward the August highs and help sustain the broadening formation that has been developing since July 2025.

On the downside, a break below 1.11—the 50% retracement of the 2022–2026 advance—would expose 1.09. This level represents the 61.8% retracement and aligns with multi-decade resistance-turned-support, making it a potential area to watch for a rebound.

GBP/USD Outlook: Weekly Time Frame – Log Scale

Source: TradingView

GBP/USD is also showing a neutral-to-bullish setup, with both price action and RSI holding within the boundaries of a sideways consolidation that has been in place since November 2025.

Key support is near 1.3130, aligning with the 78.6% extension of the June 2025–November 2025–January 2026 cycle. A break below this level would expose 1.29 as the next potential support. It would also mark a bearish break below the nearly year-long consolidation, strengthening the pair’s longer-term bearish bias.

As long as GBP/USD holds above 1.3130 and within the consolidation, the neutral-to-bullish outlook remains intact across the charts. The midpoint of the range, around 1.3400–1.3480, is the next potential resistance zone, followed by the upper boundary near 1.36.

Written by Razan Hilal, CMT

Follow on X: @Rh_waves

The Pound Sterling registers solid gains against the US Dollar, even though the latest US inflation data, instead of fueling speculation for a Fed hike in October, is nearly cementing the case for December. The GBP/USD trades at 1.3267, up 0.56%, after reaching a low of 1.3184. Read More...

Pound Sterling Price News and Forecast: GBP pares losses and nears range top at 1.3300The British Pound (GBP) retraces Wednesday’s losses against the US Dollar (USD) on Thursday, as upbeat UK macroeconomic data has offset the negative impact of Bank of England’s (BoE) Chief Economist Huw Pill's comments. The GBP/USD has returned to the mid-range of the 1.3200s, after testing year-to-date lows around 1.3140 the previous day, and approaches the last three weeks’ range top, at the 1.3300 area. Read More...

GBP/USD Price Forecast: Pound pares losses and nears range top at 1.3300The British Pound (GBP) retraces Wednesday’s losses against the US Dollar (USD) on Thursday, as upbeat UK macroeconomic data has offset the negative impact of Bank of England’s (BoE) Chief Economist Huw Pill's comments. The GBP/USD has returned to the mid-range of the 1.3200s, after testing year-to-date lows around 1.3140 the previous day, and approaches the last three weeks’ range top, at the 1.3300 area. Read More...

The British Pound (GBP) retraces Wednesday’s losses against the US Dollar (USD) on Thursday, as upbeat UK macroeconomic data has offset the negative impact of Bank of England’s (BoE) Chief Economist Huw Pill's comments. The GBP/USD has returned to the mid-range of the 1.3200s, after testing year-to-date lows around 1.3140 the previous day, and approaches the last three weeks’ range top, at the 1.3300 area.

UK data released on Thursday revealed that the economy grew unexpectedly in August, with GDP up 0.1%, against the 0.1% contraction anticipated by market analysts and following a 0.4% growth in the previous month. These figures have been largely due to the stronger-than-expected UK industrial Production, which has offset the softer performance of the construction and services sectors.

In the US, hot Consumer Price Index (CPI) figures on Wednesday boosted hopes of a Federal Reserve (Fed) interest rate hike in October, but some central bank officials poured cool water, playing down the possibility of back-to-back rate hikes, and triggering a significant pullback in US Treasury yields and the US Dollar.

Technical Analysis: The Pound might have found a bottom at the 1.3140 area

GBP/USD trades at 1.3257, with a neutral near-term tone as the pair consolidates its recovery from Wednesday's lows, with bulls looking at the top of the last few weeks' trading range, at the 1.3300 area. The Relative Strength Index (14) around 55 suggests balanced, modestly positive momentum, while the Moving Average Convergence Divergence (MACD) has turned slightly positive but remains close to zero, reinforcing the idea of a range-bound market rather than a directional breakout.

A clear break of the mentioned 1.3300 level and, preferably, with a continuation above the 38.2% Fibonacci retracement level of 1.3345 would confirm the completion of a five-wave (Elliot Wave) cycle. That scenario would bring the mid-September highs, just above 1.3400, into focus, ahead of the 61.8% Fibonacci retracement at 1.3470.

On the downside, a bearish reaction below Wednesday's low at 1.3137 cancels this view and exposes the November 2025 lows at 1.3030 and 1.3010.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Pound Sterling Price Today The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Australian Dollar.

USDEURGBPJPYCADAUDNZDCHFUSD-0.54%-0.49%-0.32%-0.28%0.75%-0.31%-0.59%EUR0.54%0.04%0.21%0.27%1.31%0.21%-0.06%GBP0.49%-0.04%0.17%0.21%1.24%0.19%-0.12%JPY0.32%-0.21%-0.17%0.02%1.09%-0.02%-0.29%CAD0.28%-0.27%-0.21%-0.02%1.04%-0.02%-0.31%AUD-0.75%-1.31%-1.24%-1.09%-1.04%-1.06%-1.35%NZD0.31%-0.21%-0.19%0.02%0.02%1.06%-0.30%CHF0.59%0.06%0.12%0.29%0.31%1.35%0.30% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann report GBP/USD’s sharp swing between 1.3275 and 1.3137 before closing at 1.3196. Short term, recovery is expected to extend toward 1.3260 but is unlikely to sustain above that level. Over the next one to three weeks, price action is viewed as range expansion, with the Pound likely confined between 1.3135 and 1.3280.

Pound trapped in broader range"24-HOUR VIEW: After GBP rose to a high of 1.3259 two days ago, we indicated yesterday that “the advance has scope to extend, but with no significant increase in upward momentum, GBP may not break the major resistance at 1.3280.” We added, “to sustain the momentum, GBP must hold above 1.3230.” The subsequent price action did not unfold as expected. GBP rose to 1.3275 but then it plunged to a low of 1.3137. The decline was brief, as GBP rebounded strongly from the low to close at 1.3196 (-0.45%), with the recovery extending into the early Asian session today. The recovery could extend to 1.3260. Based on the prevailing momentum, a continued rise above this level is unlikely. On the downside, a breach of 1.3180 (minor support is at 1.3205) would mean GBP is more likely to range-trade rather than continuing to recover."

"1-3 WEEKS VIEW: We highlighted on Monday (12 Oct, spot at 1.3235) that GBP “is expected to trade in a range between 1.3170 and 1.3280.” Yesterday, GBP rose close to 1.3280 with a high of 1.3275 before plummeting to a low of 1.3137. GBP rebounded sharply from the low. The price action did not result in any clear increase in downward momentum. The decline to 1.3137 appears to be more of a range expansion rather than the start of a sustained decline. From here, we expect GBP to trade between 1.3135 and 1.3280, and GBP must clearly break either of these levels before a more directional move can be expected."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

GBP/USD Outlook US Inflation Puts Lloyds' 1.34 Recovery Case Under Pressure
The British Pound has fallen towards support against the US Dollar after US inflation, testing Lloyds' recovery case before UK growth figures and the Budget.
Pound Sterling's route back towards $1.34 has become harder after Wednesday's US inflation release sent GBP/USD down to the support area Lloyds identifies as important to its recovery prospects.

The Pound traded near $1.3159, down 0.74%, putting the bank's 1.3140-1.3163 support zone under pressure ahead of Thursday's UK GDP figures.

Latest-Exchange Rates:

Pound to Dollar (GBP/USD): 1.319418 (-0.48%)

Euro to Dollar (EUR/USD): 1.115758 (-0.39%)

Dollar to Yen (USD/JPY): 158.33282 (0.00%)

Image: GBP/USD exchange rate's intraday chart showing fall afer US inflation print.

Earlier in the session, Sterling briefly traded above the bank's upside trigger, but Lloyds requires a daily close above it.

Lloyds says: "A close above 1.3274 would set things up for a bigger bounce, 1.3333 the first objective above, then 1.3400. Neutral here."

These are conditional technical objectives.

Before the decline, Lloyds had identified a possible reversal pattern: "Indeed, a diamond formation looks to be developing above there, which is typically a reliable reversal signal once complete (there is more room for consolidation, another week perhaps)."

Wednesday's fall below $1.32 weakens that developing formation, leaving the lower support band as the immediate test.

A crowded Dollar position still needs a catalyst
Before the inflation figures, JPMorgan's trading desk questioned how much momentum remained behind recent Dollar buying.

"View remains the same here, LOTS of USD have been bought over the last half percent or so and it looks laboured, seems asymmetric ahead of CPI but the retracement in fixed income is pouring a little cold water on that to be fair."

The release supplied fresh support for the US currency: September core consumer prices rose 0.3% over the month, keeping pressure on the Federal Reserve to address underlying inflation as well as energy costs.

An October hike is still a separate question.

ING's Francesco Pesole expected a hotter core reading before the release, but said a larger surprise would be needed to transform the immediate policy outlook:

"Markets may marginally increase expectations for an October hike, but for pricing to return above 50% (now 20%) we probably need to see headline close to 1.0% MoM and/or core at 0.4% MoM today."

The 20% estimate predated CPI.

After the release, the Wall Street Journal reported October hike odds of 49%.

Pesole also noted: "Williams said he still expects another hike this year, but there are signs that inflation will slow and he doesn't see further tightening in 2027."

The Budget comes before the longer recovery
JPMorgan sees a separate potential source of Sterling support if the UK can preserve investors' confidence through its fiscal announcement.

"UK wise I feel like if we can get through the Budget unscratched then we could have a European integration hope trade as Burnham will not leave it alone, and the comments sound pretty positive."

Closer European ties also underpin BofA's medium-term Sterling recovery case.

The desk favours GBP/USD over expressing that optimism against the Euro.

"Given how beaten up EUR is I am thinking about cable as the better vehicle to express above view but it is early days yet."

First comes August GDP, due at 7am on Thursday 15 October, with Sterling already testing support rather than approaching the close Lloyds needs for a larger rebound.

GBP/USD Exchange Rate FAQ
What would open the way for GBP/USD to recover towards 1.34?

Lloyds requires a daily close above 1.3274, followed by progress through intermediate resistance.

Where is the immediate support for the Pound?

Lloyds identifies the 1.3140-1.3163 area, which Wednesday's decline has brought into focus.

When is the next UK growth release?

August GDP is scheduled for 7am on Thursday 15 October.

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann report that GBP/USD has bounced firmly to 1.3255, invalidating their prior downside-bias call. Short-term momentum allows for further gains, but they doubt a clean break of major resistance at 1.3280 without stronger upside signals. Over the coming weeks, they expect Pound-Dollar to stay range-bound between 1.3170 and 1.3280, with another resistance level at 1.3310 if the upper band is breached.

Pound holds firm within defined range"24-HOUR VIEW: While we indicated yesterday that GBP “could trade with a downside bias,” we held the view that “any decline is likely part of a lower range of 1.3190/1.3235.” Our view was incorrect, and we also underestimated the volatility as GBP rose sharply from 1.3205 to 1.3259. GBP closed on a firm note at 1.3255 (+0.34%). The advance has scope to extend, but with no significant increase in upward momentum, GBP may not break the major resistance at 1.3280. To sustain the momentum, GBP must hold above 1.3230, with minor support at 1.3245."

"1-3 WEEKS VIEW: On Monday (12 Oct, spot at 1.3235), we highlighted that GBP “is expected to trade in a range between 1.3170 and 1.3280.” Although short-term upward momentum has improved somewhat, we will continue to hold the same view for now. Looking ahead, should GBP break above 1.3280, it would likely encounter another firm resistance at 1.3310."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

US Dollar Talking Points:
The US Dollar remains near fresh yearly highs and EUR/USD near lows as both markets have shown an extreme stretch over the past few weeks.
Meanwhile GBP/USD holds within what’s been a consistent range, and USD/JPY retains clean bullish structure.

The US Dollar rally remains in force but the past few weeks have seen a slowing in the move, illustrated by upper wicks on the weekly chart. Along with that, we’ve seen odds for an October rate hike soften even despite some pointed and hawkish comments over the past couple days from Beth Hammack of the Cleveland Fed and Austan Goolsbee of the Chicago Fed.

For structure, there’s support at the Fibonacci level of 101.80 and if sellers can make a push below that, it’ll start to look like the currency is more ripe for a pullback, which can be extrapolated elsewhere, such as EUR/USD and GBP/USD.

US Dollar Weekly Chart
Chart prepared by James Stanley; data derived from Tradingview

EUR/USD
The Euro is 57.6% of the DXY quote and as discussed in the webinar, the long-term prospects of the single currency remain in question given the large differences in the Eurozone economic backdrop. Flying French yields have brought that question back to the forefront and it makes the Euro as a less attractive medium for reserves, and I think that’s played a role, albeit minor at this point.

But – the sell-off has started to slow and CPI tomorrow can give this a push. At this point it looks like the EUR/USD pair wants to test a cross back from oversold territory on daily RSI, and as shown in the webinar, there’s a falling wedge formation shorter-term which points to the possibility of bullish reversal.

EUR/USD Daily Chart
Chart prepared by James Stanley; data derived from Tradingview

GBP/USD
If looking for USD-weakness, GBP/USD makes a stronger case, at this point. The pair has been lodged at range support for three weeks now, around the 1.3200 handle. And from the weekly chart, we can see a range that’s been in-place for pretty  much all of 2026, so far.

GBP/USD Weekly Chart
Chart prepared by James Stanley; data derived from Tradingview

USD/JPY
For USD-strength, USD/JPY makes for a more compelling case and if we’re in the scenario that presents stronger rate hike expectations with higher-than-expected inflation, that can support upside in the pair.

The primary issue is a theoretical cap to upside after the rather heavy-handed interventions, but that opens up a new realm of scenarios in breakout situations, particularly if the 160.00 level can come back into play. For now, there’s a similar build of price action that showed in August, when a series of higher-lows ran into that big figure, ultimately culminating in a strong sell-off brought upon by intervention threats.

Where this comes in for CPI tomorrow, is if we do get some element of pullback, support remains attractive for higher-low potential. There’s levels at 158.06 and 157.54, followed by the same 156.68 that’s been in-play multiple times already.

USD/JPY Daily Price Chart
Chart prepared by James Stanley; data derived from Tradingview

USD/CAD
Similarly, the rally in USD/CAD has slowed over the past couple weeks. Sellers haven’t taken that next major step, until today, at least, and this highlights a significant level at the 1.4200 handle. A push below that and the weekly chart will start looking like an evening star formation, which opens the door for a push back towards the 1.4000 handle. The question is whether USD-weakness would be more attractive here than EUR/USD or GBP/USD above, and I don’t expect that to be the case at this point given what the chart is showing.

USD/CAD Weekly Chart
Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Market Analyst, Global Macro

GBP/USD rises amid a weaker USD, but gains could be limited
GBP/USD is rising towards 1.3230 at the time of writing, supported in part by a weaker U.S. dollar and developments in the UK.

The IMF upgraded its UK growth outlook, saying GDP is set to grow by 1.3% in 2026, an upgrade of 0.5 percentage points from its forecast in April. This comes despite the energy shock unleashed by the Iran war, with the IMF pointing to AI as a driver of stronger growth. It sees the UK emerging as one of the winners in the tech boom.

However, the IMF also warned of further price rises and job losses, and cautioned against state handouts ahead of the budget later this month. Any measures announced by Chancellor John Healey need to be well funded to maintain credibility.

Stronger-than-expected like-for-like retail sales data from the British Retail Consortium and hawkish comments from Bank of England policymaker Megan Greene have also supported sterling. Greene warned that second-round inflationary effects could emerge if the central bank fails to raise rates soon.

Meanwhile, the U.S. dollar is seeing modest profit-taking, pulling back from an 18-month peak reached on Monday.

Still, the downside for the dollar appears limited, given growing expectations that the Federal Reserve will hike interest rates again before the end of the year.

Geopolitical risks also remain in play, with the U.S.-Iran standoff and ongoing fighting involving Iran-backed militias and Saudi Arabia potentially keeping safe-haven flows directed towards the U.S. dollar.

This week, attention will be on U.S. CPI data on Wednesday and PPI data on Thursday for further clues on the Fed’s outlook.

GBP/USD Forecast – Technical Analysis

GBP/USD ran into resistance at 1.3650 before moving lower and finding support around 1.3200. The pair is trading below its 50 and 200 EMAs, consolidating above 1.3200 but below 1.3280.

Sellers will need to break below the 1.3200 support zone to establish a lower low and bring 1.3100 into focus, followed by 1.3000, the psychological level.

Buyers will need to move above 1.3275 to bring 1.3340 into focus. A break above here would turn attention to the 50 EMA at 1.3365, followed by the 200 EMA around 1.3400, where buyers could gain further traction.

Gold rises as Oil, Treasury yields slip, central bank buying remains strong
Gold is heading higher on Tuesday as oil prices slip, helping Treasury yields ease. However, attention remains on tomorrow’s U.S. inflation data for fresh signals on the Federal Reserve’s interest rate outlook.

Oil prices are falling for the first time in almost a week. Elevated oil prices, driven by the conflict in the Middle East, have raised inflation concerns, pushing Treasury yields higher and strengthening the case for restrictive monetary policy.

Higher yields and a stronger U.S. dollar weigh on demand for non-yielding, dollar-denominated gold.

The benchmark 10-year Treasury yield has slipped to 5.19% today as technology stocks in Asia sell off and investors return to safe-haven assets.

Tomorrow’s CPI data will be important for the short-term outlook, followed by Thursday’s PPI report. Hotter-than-expected inflation, particularly in core CPI, could increase expectations for an October rate hike. Markets are currently pricing in just a 19% chance of a Fed hike this month, but still see around an 85% probability of an increase before the end of the year.

Cleveland Fed President Beth Hammack has said the Fed should move quickly towards a more restrictive monetary policy stance to control inflation.

Global gold ETF holdings reached 4,256 tonnes in September, following inflows of $10 billion that month and third-quarter inflows of $31 billion.

However, central bank buying remains supportive. China recorded a 23rd consecutive month of gold purchases in September, adding 23 metric tonnes, its largest monthly purchase in three years. Other emerging-market central banks have also been buying gold to reduce their reliance on U.S. government bonds and the dollar.

Central banks purchased a total of 39 tonnes in August, taking total purchases this year to 170 tonnes. Persistent buying keeps Gold prices supported.

XAU/USD Forecast – Technical Analysis

After falling from $4,700, gold found support around $4,100. The price has moved above the falling trendline as it heads towards $4,200. However, it remains below the 20 and 50 EMAs, suggesting the outlook remains bearish.

Buyers would need to break above $4,200 and the 20 EMA, followed by $4,310 and the 200 EMA, for the outlook to improve. Above here, $4,500 comes into focus.

If gold fails to reclaim $4,200, a retest of $4,100 is possible. A break below this level would establish a lower low, turning attention towards $3,940, the 2026 low.

Key Points:Markets price an 80.6% probability of the Fed holding rates steady in October, while softer Treasury yields and Wednesday's U.S. CPI report keep the dollar's outlook in focus.DXY remains bullish above 102.10 and its rising trendline, with a breakout through 102.61 potentially targeting 102.97 and 103.36.EUR/USD remains bearish below 1.1218, with a break beneath 1.1161 exposing 1.1128 and 1.1092 as German inflation and weak French growth weigh on the euro.GBP/USD consolidates within a tightening triangle above 1.3222, with a breakout above 1.3284 targeting 1.3323, while a drop below 1.3180 could accelerate selling pressure.Dollar Index: CPI Looms as Fed Pause Expectations Hold The dollar’s major backdrop softened slightly on Tuesday as the pressure on the dollar from lower Treasury yields and falling oil prices reduced some of the upside from dollar inflation concerns. The 10-year Treasury yield fell approximately five basis points to 5.19%. The markets are assigning an 80.6% probability that the Federal Reserve leaves rates unchanged at its October 27-28 meeting.

The consumer price index is the next major report to watch out for in the U.S. Moreover, the Federal Reserve Bank of Cleveland President Beth Hammack said that underlying inflation is around 2.5%-3.0% and that the labor market does not need to be damaged unnecessarily to cool inflation; however, she argues that demand still needs to be weakened.

EUR: German Inflation Adds Pressure as French Growth Stalls Germany’s inflation increased to 3.3% in September from 2.9% in August, adding more pressure on the ECB to keep policy restrictive.

France remains the bigger concern. The Bank of France estimates the economy grew by only 0.1% in the third quarter, as growth in services offset weakness in manufacturing, construction, and agriculture.

GBP: BoE Tightening Bets Meet Fiscal Restraint Expectations for tighter Bank of England policy are supporting sterling, and a November rate increase is priced at around 90% probability. Bank of England policymaker Megan Greene also argues the 3.75% Bank Rate may not be restrictive enough.

The IMF expects UK growth to average 1.3% in 2026 and 1.2% in 2027. The forecasts for inflation are for it to average 3.3% in 2026. The combination of restrictive monetary and fiscal policies is putting pressure on the UK economy ahead of the October 28 budget.

U.S. Dollar Index Technical Analysis: DXY Holds Rising Trendline as 102.61 Remains the Breakout Trigger

Dollar Index Price Chart – Source: Tradingview The U.S. Dollar Index has edged up to 102.40 on the 4-hour chart, and what is notable is that price continues to respect the rising trendline and is comfortably above the short-term moving average. Price structure is still positive, as higher lows are still in the process of being developed; however, there have been some repeated hesitations under 102.61, which suggests that price has not cleared a clean breakout.

The first resistance is at 102.61, above which price would aim for 102.97 and 103.36. Support comes in at 102.10, then 101.75 and then 101.43.

EUR/USD Price Forecast

Every new EUR/USD analysis as it publishes, today's technical signal and key levels, live price — on one page.

See all EUR/USD forecasts Momentum is neutral as the Relative Strength Index is near the 50-neutral level. As long as price continues to trade above 102.10 and the rising trendline, I would remain bullish. A break below 101.75 would negate this structure. A break above 102.61 would open the upside to 102.97 and 103.36.

GBP/USD Technical Analysis: Sterling Compresses Above 1.3222 as Triangle Breakout Nears

GBP/USD Price Chart – Source: Tradingview The GBP/USD pair is currently trading at 1.3229. On the 2-hour chart, what is noticeable to me is the narrowing trade between the falling trendline and the rising support line. The pair is currently trading above the 1.3222 support level and is approaching the rising support line. With the longer-term moving average still above, this leaves Sterling in a compressed trade where the next move out could be the breakout.

Looking at the resistance side of the trade, I’ll start at 1.3284. If the pair is able to break and close above 1.3284, then the next area of interest would be at 1.3323 and then 1.3368. On the other side of the trade, 1.3222 is the first support level, with 1.3180, 1.3147 and 1.3113 becoming more relevant to the downside.

Momentum for the pair is neutral with the RSI holding just above the mid line. Until the pair is able to move above 1.3284 or below 1.3180, the trade will remain neutral. A break above 1.3284 would give the pair a slightly higher target while a breakdown below 1.3180 would bring lower targets into play.

EUR/USD Technical Analysis: Euro Tests Trendline Resistance as 1.1218 Becomes the Key Recovery Level

EUR/USD Price Chart – Source: Tradingview EUR/USD is trading at 1.1181 on the 2-hour chart after bouncing off 1.1161 support. Currently, the price is near the 1.12-area and pressing against a descending trendline, with both moving averages above it, suggesting the bearish trend is likely to continue.

The first resistance I am looking at is at 1.1218, above which we would see 1.1275 and 1.1315. As for support, we have 1.1180-1.1161, and below that we have 1.1128 and 1.1092.

RSI is neutral and in the middle, suggesting that the pair may consolidate rather than trend strongly in either direction. Until it breaks above 1.1218, I’ll maintain a bearish bias. A break below 1.1161 would increase the likelihood of a move toward 1.1128.

Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.

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Pound to Dollar Forecast: UBS Targets $1.41 as Goldman Sachs Sees $1.28 UBS expects the Pound to recover against the US Dollar, but Goldman Sachs sees renewed weakness as banks diverge over Sterling's prospects for 2027. UBS and Goldman Sachs are pointing in opposite directions for the Pound to Dollar exchange rate in 2027, with targets of $1.41 and $1.28 exposing a disagreement over Sterling's ability to recover.

GBP/USD ended Friday near $1.3233, after losing 2.1% in September.

UBS's 8 October forecasts put the pair at 1.38 in December 2026 and 1.41 in both June and September 2027.

Goldman's 7 October projections allow for little immediate progress, with 1.33 at three months, around January 2027, followed by 1.28 at 12 months, around October 2027.

The longer targets are approximately comparable rather than identical dates, but the disagreement is already evident near the turn of the year.

Crédit Agricole adds a different path: weakness to 1.31 in December 2026 before a recovery to 1.39 by December 2027.

Image: GBP to USD weekly exchange rate chart (5-9 October) UBS recovery depends on a weaker Dollar The latest UBS projections retain the path outlined in our September coverage of its Sterling recovery call.

Its currency table points to a broad retreat in the Dollar, with the Euro also appreciating against the US currency while the Pound makes little lasting progress against the Euro.

Our reading is that the $1.41 target requires a change in the Dollar's fortunes more than a broad reassessment of Sterling alone.

UBS also expects the Bank of England to raise rates to 4.25% by March 2027 and hold them there through September, when its projected Federal Reserve rate midpoint falls to 3.88%.

That would turn the present small US policy-rate advantage into a UK advantage, making Sterling's relative return more attractive.

The BoE's September decision left Bank Rate at 3.75%, although three of its nine policymakers already wanted an increase.

Goldman's lower currency target nevertheless sits alongside a fairly restrained Fed outlook, rather than an expectation of repeated US tightening.

Goldman says: "We expect the Fed to deliver one more 25bp hike in December to a peak policy rate range of 4.00-4.25%, though we see a strong chance that the Fed will ultimately conclude that additional rate hikes are unnecessary."

It also expects US activity to remain resilient: "In the US, we expect real GDP growth of 2.3% on a Q4/Q4 basis in 2026, largely reflecting the continued boost from the AI boom."

UBS and Goldman therefore share a similar near-term Fed peak despite opposite Sterling calls, showing how little the interest-rate forecast alone resolves their currency disagreement.

Crédit Agricole sees UK risks delaying the rebound Crédit Agricole's 9 October assessment is more explicit about why Sterling could struggle first.

"We maintain a cautious GBP/USD outlook from current levels that is consistent with our constructive USD outlook. The GBP could remain a pressure valve for anxious market participants fretting about the impact of persistent stagflation risks on the UK economic, monetary and fiscal outlook."

Weak growth alongside persistent inflation leaves the UK facing a difficult combination: tighter policy can support Sterling's interest-rate appeal while increasing pressure on borrowers and public finances.

The bank sees a near-term test in the coming week's UK output figures: "For starters, we believe that incoming UK data like next week's GDP data for August could highlight the fragility of the economy to tightening financial conditions and persistent stagflationary headwinds."

It nevertheless sees reasons that pessimism may eventually become excessive.

"We also believe that some negatives are already priced into the GBP, especially vs the EUR, however, given that the Eurozone would have to deal with the consequences from the negative energy supply shock in the wake of the Iran war as well. We further note that the GBP is already looking oversold while global investors seem underinvested in UK assets."

On the Dollar side, Crédit Agricole links continued support to investment demand, rather than interest rates alone.

"The USD should remain supported also by persistent portfolio flows linked to the US economic outperformance vs other major economies in Asia and Europe. Robust economic outlook & sticky inflation have already boosted Fed policy rate expectations and the USD's rate appeal, suggesting that positives are already in the price and this could limit the currency upside."

"US policy uncertainty could linger and fiscal dominance fears could resurface as well, but not before the US economy starts to cool down in 2027. Such risks are still more than offset by the AI boom & thus the US exceptionalism narrative and could keep the USD in demand in the next three to six months."