GBP/USD trades near 1.3250 in early European trading on Thursday, October 1, extending its decline as the British Pound remains under pressure against the US Dollar. The pair continues to trade below its 100-day Simple Moving Average (SMA), keeping the short-term technical outlook bearish. Market attention is now shifting to US weekly Initial Jobless Claims and Federal Reserve officials’ comments for fresh clues on the path of US interest rates.
Monetary policy expectations remain a key driver for GBP/USD. BoE policymaker Alan Taylor recently highlighted the difficulty of raising rates without encouraging expectations of further tightening. Meanwhile, MUFG has upgraded its UK third-quarter growth forecast to 0.4% from 0.1%, suggesting that stronger economic activity could give the BoE more room to tighten policy if elevated energy prices continue to fuel inflation.
On the US side, softer-than-expected PCE inflation has reduced expectations for an October Fed rate hike, with the probability falling to around 38.2% from 45%, according to CME FedWatch data. However, Fed officials including Neel Kashkari continue to emphasize persistent inflation risks and the resilience of the US economy, limiting the downside for the Dollar.
Technical Analysis
GBP/USD remains below both the 100-day SMA at 1.3415 and the 20-period Bollinger Band midpoint at 1.3385, maintaining a bearish technical structure. The RSI stands near 33.20, indicating strong downside momentum while approaching oversold territory.
The first major support is at 1.3202, followed by the lower Bollinger Band near 1.3140. A sustained break below 1.3140 could expose 1.3038, with the psychological 1.3000 level potentially becoming the next downside target.
On the upside, 1.3311 is the first resistance to watch, followed by 1.3385 and the 100-day SMA at 1.3415. A move above the latter would weaken the current bearish setup and shift attention toward the upper Bollinger Band around 1.3630.
GBP/USD is approaching an important technical support zone while expectations for BoE and Fed policy remain fluid. Traders should closely monitor 1.3202 on the downside and 1.3311 on the upside, alongside upcoming US economic data and Fed commentary. A break of either level could provide a clearer signal for the pair’s next move and potentially increase volatility in the forex market.
For traders, the combination of 100-day SMA resistance, RSI momentum, UK growth expectations, BoE policy signals, and changing Fed rate expectations provides several key catalysts to watch when assessing the next potential move in GBP/USD.
