Sterling rose against the US Dollar as GBP/USD edged back towards the middle of its recent band, trading near 1.3250 after stepping up from just above 1.3200 to just under 1.3260. Even so, the pair remains in a third consecutive week confined to roughly 1.3200–1.3300, a range it has held since 24 September. In UK policy commentary, a Bank of England external member argued that a 3.75% Bank Rate is not restraining activity much and that waiting for inflation to feed into wages and prices risks moving too late, while in the US a senior Federal Reserve official said one more hike this year is appropriate and saw no need for another in 2027.
Rate pricing still points elsewhere. Futures imply around 90% odds that the Fed funds rate, currently 3.75%–4.00%, ends 2027 at least 0.5 percentage points higher, suggesting two additional moves versus one in that official’s view. The Pound barely moved against the Euro, indicating the day’s GBP/USD rise was driven by a softer Dollar. Next up, US CPI is forecast at 3.6% year on year for September versus 3.4%, with core at 2.5% from 2.4%, before retail sales expected at 0.3% after 1.2%; UK GDP for August is seen down 0.1% after 0.4%, as markets price the November 5 BoE decision above 80%. On technicals, GBP/USD sits below its 50-day EMA just above 1.3350 and 200-day EMA just under 1.3400, after a bearish cross in early October.
GBP/USD Trading Range and Strategy
We should focus on the clear 1.3200 to 1.3300 range that has held GBP/USD captive since late September. Since the pair remains trapped below its 50-day and 200-day moving averages following a death cross earlier this month, we should look to sell near range resistance around 1.3300 while buying near support at 1.3200. According to the Bank for International Settlements, GBP/USD accounts for roughly 11% of global foreign exchange turnover, making range-bound liquidity deep enough to execute tight range-fading strategies.
Positioning Ahead of US and UK Economic Data
We need to position carefully around this week’s US inflation and retail sales data before taking large directional bets. With market futures pricing in a 90% chance of two Fed rate hikes through 2027 while Fed officials signal only one, a hotter inflation print above the expected 3.6% could quickly re-ignite US Dollar strength. If prices break below the 1.3200 floor, technical sellers will likely push Cable down toward historical support levels last seen earlier in the year.
On the UK side, we should monitor Bank of England commentary and upcoming GDP figures ahead of the November meeting. Markets are currently pricing over an 80% probability of a BoE rate hike, meaning any surprisingly weak economic data could trigger a swift repricing down toward 1.3150. We should keep position sizes controlled and focus on volatility-based derivative strategies, such as straddles or short-term options, to cap risk ahead of key central bank speeches.
