British Pound consolidates near September 16 highs, just below 1.3400 vs subdued USD
- GBP/USD preserves its recent strong gains amid a combination of supporting factors.
- Falling US bond yields undermine the USD, while BoE rate hike bets support the GBP.
- Geopolitical risks and a hawkish Fed could help limit USD losses and cap spot prices.
The GBP/USD pair enters a bullish consolidation phase during the Asian session on Thursday, trading just below the 1.3400 mark and near its highest level since September 16, touched earlier this week. Meanwhile, the fundamental backdrop seems tilted in favor of bulls and backs the case for an extension of a one-week-old uptrend.
The US Dollar (USD) struggles to attract any meaningful buyers and remains close to a nearly three-week low set on Tuesday amid declining US bond yields. The British Pound (GBP), on the other hand, is underpinned by the growing acceptance that the Bank of England (BoE) will hike interest rates in November, bolstered by a rise in UK consumer price inflation to an 11-month high in September. This, in turn, acts as a tailwind for the GBP/USD pair and validates the positive outlook.
Meanwhile, the geopolitical risk premium remains in play amid the risk of a further escalation of tensions in the Middle East. In fact, Iran's Foreign Minister Abbas Araghchi said that Tehran is prepared to give diplomacy another chance if it sees strong evidence of a sincere desire by the US to reach a just solution. Separately, The New York Times reported that the US and Israel have drawn up plans for a possible new round of strikes against Iran after the US midterm elections.
This, in turn, keeps a floor on crude oil prices, fueling inflation risks and reaffirming bets for an imminent rate hike by the Federal Reserve (Fed). According to CME Group's FedWatch Tool, traders are currently pricing in around a 90% chance that the US central bank will raise borrowing costs in December. This, in turn, helps limit the downside for the safe-haven Greenback and keeps traders from placing fresh bullish bets on the GBP/USD pair or positioning for further gains.
GBP/USD daily chart
Technical Analysis
The GBP/USD pair is sitting just above the 100-day Simple Moving Average (SMA), leaving the near-term bias broadly neutral while hinting at a tentative base above that dynamic support. Price action is compressed between the 50.0% Fibonacci retracement at 1.3404 acting as immediate resistance and the 38.2% retracement lower at 1.3341, suggesting a consolidative phase as traders await a clearer directional break.
Further up, resistance is seen at the 61.8% level around 1.3467 and the 78.6% retracement at 1.3557, ahead of the swing high region at 1.3672. On the downside, immediate support is provided by the 100-day SMA at 1.3389, followed by the 38.2% retracement at 1.3341. A break below there would expose the 23.6% level around 1.3263, with the structural low anchored near 1.3137 as a more distant floor.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Pound Sterling Price Last 7 Days
The table below shows the percentage change of British Pound (GBP) against listed major currencies last 7 days. British Pound was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.71% | -1.51% | -0.08% | -1.37% | -0.81% | -1.98% | -1.32% | |
| EUR | 0.71% | -0.84% | 0.59% | -0.75% | -0.10% | -1.28% | -0.65% | |
| GBP | 1.51% | 0.84% | 1.40% | 0.11% | 0.71% | -0.54% | 0.22% | |
| JPY | 0.08% | -0.59% | -1.40% | -1.21% | -0.69% | -1.87% | -1.19% | |
| CAD | 1.37% | 0.75% | -0.11% | 1.21% | 0.52% | -0.67% | 0.11% | |
| AUD | 0.81% | 0.10% | -0.71% | 0.69% | -0.52% | -1.17% | -0.48% | |
| NZD | 1.98% | 1.28% | 0.54% | 1.87% | 0.67% | 1.17% | 0.66% | |
| CHF | 1.32% | 0.65% | -0.22% | 1.19% | -0.11% | 0.48% | -0.66% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
