Overview of the GBP/USD Pair. October 28. The Bank of England Is Not the ECB

The GBP/USD pair traded lower on Tuesday, again without a single compelling fundamental reason. We do not bother traders with every secondary release trying to explain every move. Note only that both the euro and the pound fell before the single most important U.S. release yesterday — durable-goods orders — so macro data did not drive the dollar's strength on Tuesday. Correlation between the euro and pound is now practically absent.

If the euro's moves over the past two months look illogical and speculative, sterling has behaved very technically over the same period. Consider the daily chart: a sideways channel formed (roughly 1.3150–1.3650), visible also on the weekly timeframe. The price tested the channel's lower boundary twice, each time with a deviation. That produced a perfectly reasonable rally toward the channel's upper edge starting about two weeks ago. Technicals explain nearly all of sterling's recent moves, yet many traders prefer to attribute the pound's relative strength to the Bank of England's supposedly hawkish stance.

Once again: the European Central Bank has raised key rates twice and plans two more tightenings, yet the euro is plunging like a stone; the BoE hasn't raised rates even once, but the pound is holding up because the market is certain the BoE will hike. This makes no sense when you look at the fundamental backdrop. Since there is no logical link between fundamentals and the pair's moves, we believe attention should focus on the factors that actually work—namely, technicals.

As we've said, the pound has traded very technically in recent months. On the daily timeframe, we see a sideways channel, and on the weekly timeframe we see a sideways channel. Price has traded inside these channels for almost a year, repeatedly testing their boundaries and offering traders entry opportunities. If fundamentals aren't explaining price action now, the only remaining question is which technical factors are driving the euro's decline and how much longer this move can continue.

On the weekly chart, EUR/USD's decline over the past 8–9 months looks like a correction—a long one. That deep, extended correction likely wouldn't have happened without the stream of "black swans" that hit markets in 2026: the U.S.–Iran war, protests across EU countries, and tighter Fed policy (itself partly a response to energy-price shocks). Absent these shocks, euro and pound might well be trading above 1.20 and 1.40, respectively. We continue to believe that, however far the euro and pound fall now, they will stage a stronger recovery once the correction is complete.

The average volatility of the GBP/USD pair over the last 5 trading days is 51 pips. For the pound/dollar pair, this value is considered "average." Therefore, on Wednesday, October 28, we expect movement within a range bounded by 1.3264 and 1.3367. The higher linear-regression channel is turning down again. The CCI entered the oversold area twice and formed a bullish divergence, warning of the downtrend's exhaustion.

S1 – 1.3306

S2 – 1.3245

S3 – 1.3187

R1 – 1.3367

R2 – 1.3428

R3 – 1.3489

The GBP/USD pair has begun an uptrend that could become a long-term move. Donald Trump's policies will continue to pressure the U.S. economy, so we do not expect long-term dollar strength. So far in 2026, geopolitics and inflation have supported the dollar, forcing capital to seek safety and prompting the Fed to return to tightening. However, on the weekly timeframe, a flat range persists between 1.3150 and 1.3780 within a four-year uptrend, supporting expectations for sterling's rise in the medium term. Long positions with targets of 1.3428 and 1.3489 can be considered while price is above the moving average. Below the moving average, price can be traded on the downside, with targets of 1.3264 and 1.3245.