This market remains interesting as the price seems to be building a base and not falling to new long-term lows as the typically positively correlated EUR/USD currency pair. The GBP/USD currency pair is instead threatening to make a reversal, although it still has some more to do before it can be said that this is starting to happen. Let’s drill down and take a look.
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GBP/USD Fundamental Analysis
The British pound’s fundamental outlook is cautiously positive in the near term, as persistent inflation supports expectations of tighter Bank of England policy. September inflation rose to 3.5% from 3.1%, prompting markets to almost fully price in a quarter-point rate increase in November—a shift that has supported sterling against both the dollar and euro. However, the medium-term picture is less favourable: independent forecasts put UK growth at just 1.3% in 2026, suggesting limited capacity to absorb higher borrowing costs.
The US Dollar’s fundamental outlook remains cautiously bullish, supported by resilient economic growth and persistent inflation that keeps further Federal Reserve tightening on the table. Following September’s quarter-point rate increase, the Fed is widely expected to hold rates steady at its October 27–28 meeting, making its guidance on subsequent moves the immediate catalyst for the currency. Expectations of additional tightening support the dollar by increasing the prospective returns on dollar-denominated assets; however, forecasts differ over the timing, with Bank of America anticipating increases in both October and December.
This means fundamentals and sentiment are equally strong for both the British Pound and the US Dollar, no neither currency gets an edge here.
GBP/USD Technical Analysis
Zooming out and looking at a long-term price chart showing many months of price action will bring most analysts to the conclusion that this pair is range bound. The price has been cycling between lows near 1.3100 and highs near 1.3700 and this has been going on for well over a year.
This means that we have, effectively, a tie between these two currencies, which both also carry bullish fundamental consensuses.
If the price were near the range highs or lows, it would be possible to look for a range trade. Yet now, the price is close to the middle of this range. This means that any opportunities will have to be discovered on lower time frames and will be shorter-term by nature.
Unfortunately, looking at the hourly time frame, all we really have are a couple of support levels which look likely to be relatively strong. One is $1.3355, the other is $1.3303. For resistance, there is $1.3408.
The best course of action today will probably be looking for quick scalps from bounces off any of these three levels, while being conservative in taking profits. Remember today is a Monday, which is typically a relatively quiet and low volatility day in the Forex market.
GBP/USD H1 Price Chart
My Take on the GBP/USD
The best course of action today will probably be looking for quick scalps from bounces off any of these three levels, while being conservative in taking profits. Remember today is a Monday, which is typically a relatively quiet and low volatility day in the Forex market.
Review, Support & Resistance Levels
My previous GBP/USD free signal on 6th October was not triggered.
New trades should only be entered prior to 5pm London time today.
Long Trade Idea
Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of 1.3355, 1.3337, or 1.3303.
Put the stop loss 1 pip below the local swing low.
Adjust the stop loss to break even once the trade is 25 pips in profit.
Take off 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to ride.
Short Trade Idea
Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of 1.3385 or 1.3408.
Put the stop loss 1 pip above the local swing high.
Adjust the stop loss to break even once the trade is 25 pips in profit.
Take off 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to ride.
The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.
There is nothing of high impact scheduled today concerning either the British Pound or the US Dollar.
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