Will GBP/USD hold support amid bearish technical momentum and market caution?

Traders Union
All News
Currency
Pound Sterling slides 0.82% to $1.3144

Highlights

Dovish comments from the New York Federal Reserve President indicated a softer US rate outlook, weakening the US Dollar.
Markets are reacting to US September CPI anticipation and concerns around UK budget risks, impacting cross-currency flows.
GBP/USD trades below key moving averages with bearish momentum; expected range is $1.3078 to $1.321 with little probability of a reversal.

Dovish Fed signals and UK budget risk shift currency flows

Dovish commentary from New York Federal Reserve President John Williams has signaled a less aggressive path for US rate policy, weakening the US Dollar, according to FXStreet. This development has impacted GBP/USD by altering cross-currency flows and reducing upward pressure on the Dollar. Additionally, recent market moves have been shaped by anticipation of the upcoming US September CPI release and reactions to UK budget risks, according to Fxempire.

Downside momentum builds as GBP/USD breaches multiple supports

GBP/USD is currently positioned below the MA-20 at $1.3245, MA-50 at $1.3235, and MA-200 at $1.3404 on the current timeframe. Immediate resistance is defined by the Ichimoku Kijun at $1.3217, while intraday support lies near the session low at $1.3144. Both MACD and ADX continue to indicate a sell bias, with RSI at 15.1518, CCI and Stochastic RSI in oversold territory, and Bull/Bear Power confirming dominant seller momentum. The Awesome Oscillator also aligns with this established trend, and there is no divergence between the momentum indicators.

High downside probability as price risks breaking key support

In the short term, GBP/USD is expected to trade within a range between $1.3078 and $1.321 over the next 2 to 3 trading days. The probability of a downward move is very high, while an upside reversal appears unlikely. The baseline scenario calls for sideways price consolidation within this corridor, while any failure at support could drive a further decline below $1.3078; conversely, a sustained move above $1.3217 may trigger a recovery attempt.

Viktoras Karapetjanc, expert at Traders Union, notes that recent dovish signals from the New York Federal Reserve have triggered a fundamental shift in sentiment, weakening the US Dollar. He believes that market attention is firmly on macroeconomic releases and UK fiscal risks, which are shaping the trading landscape for GBP/USD. Despite technical weakness, Karapetjanc sees potential for a stabilization in the near term. "If the pair holds above $1.3078, there is room for consolidation before any meaningful recovery sets in," he says.

Earlier, analysts noted that GBP/USD maintained a bearish bias amid persistent downward momentum and sensitivity to central bank policy expectations and inflation data. The current analysis strengthens this view by highlighting reinforced selling pressure and oversold signals, indicating that traders should closely monitor the $1.3078 support as a break below this level could trigger additional downside.

Source of Data: GBP Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.