The GBP/USD pair saw a positive shift for two consecutive days on Monday, buoyed by a dovish Federal Reserve outlook that has led to a decrease in the safe-haven US dollar (USD). During the Asian trading session, prices hovered just above the mid-1.3300s. We anticipate it to build on Friday’s significant rebound from the 1.3260 level, which marked the lowest point since August 5th.
Global risk sentiment has notably improved after US President Donald Trump announced a reversal of his earlier threat to implement 100% tariffs on Chinese imports starting November 1st. Alongside this, expectations are growing that the U.S. central bank may lower borrowing costs two more times within the year. There are also worries that a prolonged U.S. government shutdown could diminish the value of safe-haven assets. Additionally, the outlook that the Bank of England (BoE) will maintain interest rates for the remainder of the year has added some momentum for the British pound, positively influencing the GBP/USD pair.
From a technical angle, Friday’s breach of the 23.6% Fibonacci retracement level during the monthly decline suggests a potential for further intraday increases. However, with the presence of a negative oscillator on the 4-hour/daily chart, it might be prudent to wait for more strength above the 38.2% Fibonacci level before committing to new bullish positions. Should this happen, the GBP/USD pair could rise above the key 1.3400 level, advancing towards the confluence support in the 1.3420-1.3425 range, which includes both the 200-hour simple moving average (SMA) and the 61.8% Fibonacci retracement level.
On the flip side, the area between 1.3330-1.3325 (the 23.6% Fibonacci level) seems to be acting as a barrier against any immediate downside, just ahead of the pivotal 1.3300 mark and the multi-month lows from Friday around 1.3260. If prices do fall, it could signal a continuation of the downtrend that has persisted for nearly a month, descending from the 1.3725 range, or even towards the 1.3200 threshold, above the recent two-month peak in September. Crucially, the significant 200-day SMA around 1.3180-1.3175 remains a level to watch; a break below this could present a fresh opportunity for bearish traders.
