GBP/USD outlook: Omicron concerns limit recovery and keep the downside at risk

Slobodan Drvenica Windsor Brokers

GBP/USD

Recovery attempts from new 2021 low (1.3278), posted after Omicron shock last Friday, were so far limited and unable break above Friday’s high (1.3362).

Risk-sensitive pound remains influenced by fears of the impact of new coronavirus variant, keeping the downside at risk, as daily techs remain in bearish configuration, but sideways-moving momentum studies suggest the action may hold in extended consolidation before larger bears resume.

Solid offers are seen at 1.3400 zone, which is expected to limit extended upticks and keep bearish bias.

Violation of 1.3278 low would risk drop towards key Fibo support at 1.3164 (38.2% of 1.1409/1.4249).

Conversely, lift above pivotal 1.3400 zone (10DMA / former low of Sep 29) would ease downside pressure for extended correction, but larger bears are expected to remain in play while the price action holds below 1.3513 (Nov 18 lower top).

Res: 1.3362; 1.3400; 1.3447; 1.3513.
Sup: 1.3319; 1.3278; 1.3187; 1.3164.

Interested in GBP/USD technicals? Check out the key levels

1. R3 1.3466
2. R2 1.3413
3. R1 1.3383
PP 1.3331
1. S1 1.3301
2. S2 1.3248
3. S3 1.3218

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

AUD/USD sits near a one-month top, above 0.7000 amid fresh USD selling

AUD/USD holds above 0.7000 through the Asian session, trading near a one-month high touched earlier this Monday amid renewed US Dollar selling. US bond yields decline further amid a modest pullback in crude oil prices, capping the USD recovery from a three-week low. Moreover, bets for a November RBA rate hike support the Aussie, though upside seems capped ahead of the crucial two-day FOMC meeting, starting Tuesday.

USD/JPY struggles below 157.00 on weak USD; holds above one-month low ahead of Fed, BoJ meetings

USD/JPY attracts fresh sellers during the Asian session on Monday, stalling its recovery from the lowest level since September 18, touched Friday as a further decline in US bond yields weighs on the US Dollar. Meanwhile, the Japanese Yen benefits from a more hawkish BoJ, further weighing on the currency pair. The downside, however, seems limited as traders keenly await Fed and BoJ policy meetings later this week.

Gold sticks to modest recovery gains above $4,000 as Fed hike bets cap upside

Gold stages a modest recovery from the vicinity of a three-month low, trading above the $4,000 psychological mark through Monday’s Asian session amid a softer US Dollar. US President Donald Trump has ruled out immediate military action against Iran, triggering a modest pullback in crude oil prices. Furthermore, Federal Reserve officials have signaled no urgency to raise interest rates immediately.

Cardano's derivatives and on-chain data confirm bears in control

Cardano extends losses, trading below $0.202 after three consecutive weeks of more than 20% declines since early October. Selling pressure continues to build as weakening derivatives metrics, bearish on-chain signals and a deteriorating technical outlook point to further downside risks. Derivatives data shows a bearish bias for Cardano.

CFTC Report: WTI rally runs ahead of positioning

The week in one sentence: WTI prices surged while speculative longs were cut in the week to October 20, creating the clearest price/positioning divergence. Sterling and the Canadian Dollar led the constructive currency shift, while Yen longs also rebuilt. Speculators turned less constructive on the WTI, reducing their net exposure to around 89.3K contracts.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.