GBP\/USD experienced a slight bounce from the 1.3300 level, achieving its first upward movement in six trading sessions. However, the Federal Reserve’s approaching interest rate decision is expected to maintain current trends, with a probable quarter-point rate cut anticipated on Wednesday.<\/p>\n
The currency pair remains under pressure, still below the 50-day EMA at 1.3428, while finding support near the 200-day EMA at 1.3278. Despite a minor rebound from the previous week’s low of 1.3250, the longer-term downward trend persists, with momentum indicators like RSI hovering around 43, suggesting stagnation.<\/p>\n
The Pound Sterling, known as GBP, is the world’s oldest currency and ranks fourth in global foreign exchange trading, accounting for 12% of transactions. The Bank of England’s monetary policy, especially interest rate adjustments, plays a central role in influencing the currency’s value, aiming for a 2% inflation rate.<\/p>\n
Various data releases, such as GDP and employment figures, impact GBP’s strength. A positive Trade Balance strengthens the Pound by increasing demand from international buyers for British exports. Conversely, negative economic data or a Trade Balance deficit could lead to currency depreciation.<\/p>\n
We’ve seen GBP\/USD struggle to find direction, consolidating around the 1.2450 mark. A recent test of the 50-day Exponential Moving Average (EMA) at 1.2510 was quickly rejected, showing sellers are still in control of any rallies. This price action keeps the pair in a tight range, much like the choppy periods we saw back in 2019 before the Fed’s cutting cycle began in earnest.<\/p>\n
The key focus now is the growing divergence between the Bank of England (BoE) and the Federal Reserve. With UK inflation recently reported at 2.5% and third-quarter GDP showing a minor contraction of 0.1%, pressure is mounting on the BoE to consider rate cuts before year-end. In contrast, the US economy remains more resilient, giving the Fed room to hold interest rates higher for longer.<\/p>\n
For derivative traders, this policy uncertainty suggests buying volatility might be a prudent strategy. Options straddles or strangles could benefit from a significant breakout, which could be triggered by the upcoming BoE meeting in November. The current implied volatility for GBP\/USD is sitting at a relatively low 6.8% for 3-month options, which may not fully price in the risk of a dovish BoE.<\/p>\n
We are watching key technical levels, with immediate support near 1.2380, the low from early October. A decisive break below this could open up a path towards the 1.2250 handle, a level not seen since the economic jitters of mid-2024. Momentum indicators are bearish but not yet oversold, suggesting there is still room for further downside.<\/p>\n
Any recovery will likely face stiff resistance around the 1.2510 area, where the 50-day EMA converges with prior support. To shift the current bearish outlook, we would need to see a sustained move above 1.2600. Such a rally would likely require a surprisingly weak US jobs report or a hawkish pivot from the BoE, neither of which is our base case.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" GBP\/USD sees modest rebound but stays under pressure ahead of Fed’s expected interest rate decision Wednesday.<\/p>\n","protected":false},"author":62,"featured_media":17033,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-33304","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/33304","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=33304"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/33304\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17033"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=33304"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=33304"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=33304"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}