GBP/USD Faces Resistance as US Dollar Strengthens

GBP/USD Faces Resistance as US Dollar Strengthens

The GBP/USD pair encounters resistance as it attempts to breach the critical level at 1.2145. The US Dollar's resurgence is dampening investor risk appetite, potentially leading the pair to retreat to seven-month lows. The United Kingdom's economy is grappling with the impact of elevated interest rates imposed by the Bank of England (BoE), which is determined to combat persistent consumer inflation.

Various economic indicators, including business activities, labor demand, and retail sales, have all registered significant declines. High inflation is straining household budgets and continues to pose inflationary risks. Notably, strong wage growth has created skepticism among market participants regarding UK Prime Minister Rishi Sunak's pledge to halve headline inflation to 5.4% by year-end.

Investor attention is firmly fixed on the upcoming interest rate decision by the BoE, scheduled for November 2. It is widely expected that the central bank will opt to maintain interest rates at their current level of 5.25%.

From a technical perspective, the price could potentially target 1.2050 as its first level of support before a potential pullback within the white rectangle, followed by another robust bearish move.

As the GBP/USD pair faces these economic challenges, traders are closely monitoring the BoE's actions and the broader economic landscape to gauge the currency's future trajectory. The interplay of economic and financial factors will be pivotal in determining the pair's movements in the coming days.


Our preference

Short positions below 1.22850 with targets at 1.2050 & 1.1950 in extension.