FX.co ★ GBP/USD

The pound weakened against the dollar during the early European trading session, testing the 1.3225 level. Rising US Treasury yields and the hawkish stance of Federal Reserve officials continued to support the dollar against the pound. Market sentiment was significantly influenced by recent comments from policymakers such as Chicago Fed President Austin Goolsbee and Federal Reserve Board member Michael Barr. They warned that persistently high inflation and the risk of hyperinflation stemming from fiscal stimulus and productivity changes could warrant further monetary tightening. As a result, market expectations regarding interest rates have shifted, with participants widely anticipating a high probability of further monetary tightening before the end of the year. Upcoming macroeconomic data, including key US employment figures and the Personal Consumption Expenditures (PCE) price index report, remain in focus for traders, who are hoping for confirmation of the resilience of the US economy and to provide short-term support for the dollar. Meanwhile, the underlying outlook for the pound is becoming increasingly fragile due to the interplay of domestic economic weaknesses and the Bank of England's shifting outlook. HSBC analysts warn that weak UK labor demand and sluggish private sector growth could continue to weigh on the pound, particularly in contrast to the relatively robust US economy. Rising energy prices have created a complex political dilemma for the UK, exacerbating inflation risks at a time when the economic outlook appears challenging. Furthermore, the upcoming fiscal update adds further pressure, while rising government bond yields and the difficult choices facing the leadership underscore the challenging environment for British assets. The fundamental divergence between the strong US economic engine and the constrained UK economic situation is intensifying the ongoing downward pressure on the GBP/USD pair. Technical indicators on the daily chart reflect this general selling pressure, showing the pair firmly constrained below key moving average resistance levels. The spot exchange rate continues to trade below the 20-day and 100-day simple moving averages of the Bollinger Bands, with the short-term downtrend persisting and the pair moving towards the lower end of its volatility range. Although the 14-day Relative Strength Index (RSI) is in oversold territory, near 28.43, indicating weakening downward momentum, upward attempts are limited by the absence of a clear reversal pattern, and resistance remains. Near-term downside resistance lies around 1.3202, followed by the lower Bollinger Band around 1.3145. A break of these levels could find stronger psychological support around 1.3000. Conversely, any rebound attempt must first break the initial resistance level at the recent high of 1.3280. A break of this level would be followed by a dense supply zone formed by the middle Bollinger Band (around 1.3395) and the 100-day simple moving average (around 1.3415), limiting further upside. The technical picture will not change and open the way to the upper limit of volatility (around 1.3645) unless buying pressure continues and the moving average resistance levels are broken. Traders will remain cautious until these technical parameters are surpassed, while also considering upcoming US inflation figures and UK fiscal concerns to determine the next key move.