GBP/USD crawls higher and approaches 1.3650

The sterling is set for its fourth positive day in a row, extending its rebound from year-to-date lows near 1.3400 last week to session highs right below 1.3650 at the time of writing.

BoE’s rate hike expectations are buoying GBP demand

The pound firmed up over the last days, to pare losses from the previous two weeks. The markets seem to have shifted the focus from the fuel shortages and supply disruptions in the UK to the possibility that the Bank of England will lead the major central banks on hiking interest rates.

On the macroeconomic front, September's UK services sector’s activity revised upwards to 55.4 from preliminary estimations of 54.6. The prices component, however, increased at record levels, with new orders plunging amid shortages of supply and staff that might deteriorate the sectors’ growth prospects.

GBP/USD: further falls to 1.3163/58 remain likely – DBS Bank

According to FX Analysts at DBS Bank, however, point out to a triangle pattern that might send the GBP to the mid-range of 1.3100: “The triangle can eye a probe towards the 38.2% Fibonacci retracement of the 1.1412-1.4248 range grip (at 1.3158), which covers the covid flash lows and its highest recovery point. In the same price zone, we have on sight strong support offered by the 200-week moving average of 1.3163.”

Technical levels to watch