Today, the GBP/USD pair starts the week with a bearish gap amid broad U.S. dollar strength and is struggling to hold on to Friday's strong gains. Spot prices show no further upward momentum and remain below the 1.3500 level. 
Over the weekend, Japan's Liberal Democratic Party (LDP) elected Sanae Takaichi as its new leader. Since Takaichi is known as a supporter of loose fiscal policy, this choice increases expectations that the Bank of Japan will postpone raising rates, which may trigger a significant sell-off of the Japanese yen. As a result, this supports the U.S. dollar's rise, which is a key pressure factor on the GBP/USD pair.
However, the dollar's upward potential is limited by growing expectations of two U.S. Federal Reserve rate cuts before year-end. Additional constraints on the dollar come from concerns about a prolonged U.S. government shutdown and increased investor risk appetite, which could also support GBP/USD.
Market participants also expect the Bank of England to keep interest rates at their current level until year-end, given accelerating inflation and resilient economic growth. This will create a positive backdrop for the British pound, thereby limiting further GBP/USD losses. In this context, it is worth being cautious about claims that the recent rebound from September's low has ended.
From a technical perspective, since oscillators on the daily chart are negative and the 9-day EMA is below the 14-day EMA, this confirms the bearish outlook for the pair.
The nearest resistance has been found at 1.3420, below which lies the round level of 1.3400. A break below it could accelerate the decline toward the September low around 1.3323.
On the other hand, the 50-SMA is preventing the pair from moving higher. If prices overcome this level around 1.3465, the next resistance will appear at 1.3484, followed by the round level of 1.3500, where the 100-day SMA is currently located. Breaking above it would open the way for further bullish momentum.
For better trading opportunities, traders should wait for the release of the UK Construction PMI, which may provide the next impulse. However, the main focus will remain on Bank of England Governor Andrew Bailey's speech during the North American session, which will have a significant impact on the pound's dynamics and create new trading opportunities for GBP/USD.
