|

British Pound consolidates around mid-1.3300s vs USD; upside potential seems limited

  • GBP/USD steadies following the previous day’s modest bounce from over a three-week low.
  • The end of Israel-Iran hostilities undermines the safe-haven USD and lends support to the pair.
  • Hawkish Fed bets limit USD losses, while UK political turmoil acts as a headwind for the GBP.

The GBP/USD pair struggles to capitalize on the previous day's modest bounce from the 1.3300 neighborhood, or over a three-week low, and seesaws between tepid gains/minor losses during the Asian session on Tuesday. Spot prices currently trade around mid-1.3300s amid a softer US Dollar (USD), though the fundamental backdrop warrants some caution before positioning for any meaningful appreciation.

Iran’s army announced on Monday that its attack on Israel was over, though it warned that further strikes on Lebanon would open the door for retaliation. Israeli Prime Minister Benjamin Netanyahu acknowledged the halt in fighting with Iran, but he vowed to respond with force to future attacks. This, in turn, drags the safe-haven USD further away from its highest level since late March, touched the previous day, and offers some support to the GBP/USD pair.

Meanwhile, the US and Iran remain at odds over key issues, including Tehran's nuclear program and the Strait of Hormuz. This keeps a lid on the market optimism, which, along with hawkish US Federal Reserve (Fed) expectations, should help limit deeper USD losses. In fact, traders are currently pricing in over a 70% chance that the US central bank will hike rates by the end of this year amid inflationary concerns, which favors the USD bulls and caps the GBP/USD pair.

Meanwhile, UK Prime Minister Keir Starmer's authority has been severely shaken following the resignations of junior ministers, fueling political uncertainty. This might hold back traders from placing aggressive bullish bets around the British Pound (GBP). Hence, it will be prudent to wait for strong follow-through buying before confirming that the GBP/USD pair has formed a near-term bottom, as the focus remains on the release of US inflation figures and the monthly UK GDP.

US Dollar Price This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Swiss Franc.

USDEURGBPJPYCADAUDNZDCHF
USD-0.20%-0.12%-0.10%0.07%-0.42%-0.51%0.15%
EUR0.20%0.04%0.20%0.31%-0.23%-0.31%0.35%
GBP0.12%-0.04%0.09%0.23%-0.27%-0.36%0.30%
JPY0.10%-0.20%-0.09%0.12%-0.35%-0.48%0.28%
CAD-0.07%-0.31%-0.23%-0.12%-0.42%-0.59%0.08%
AUD0.42%0.23%0.27%0.35%0.42%-0.08%0.58%
NZD0.51%0.31%0.36%0.48%0.59%0.08%0.67%
CHF-0.15%-0.35%-0.30%-0.28%-0.08%-0.58%-0.67%

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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

More from Haresh Menghani
Share:

Editor's Picks

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 rebounds from three-month low and retakes $4,000 on weak USD; focus remains on FOMC

Gold attracts some buyers, moving back above the $4,000 psychological mark during the Asian session amid a broadly weaker 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.