FX.co ★ GokBoruHunter | GBP/USD

GBP/USD Daily Outlook Update GBP/USD is up about 0.17% to 1.3260 against the USD in today's European session. This is due to GBP's strong performance against other currencies, even as market analysts wonder whether the BoE will resort to re-pricing with hawkishness. BBH strategists have highlighted a growing disparity between market assumptions about the Bank of England's future monetary policy and BBH's own assumptions. The swap curve still implies 100 basis point hikes in the BoE policy rate over the next 12 months, taking it to 4.75%. However, BBH believes the BoE does not need to raise rates to that extent, since rates are already within the neutral band of 2% to 4%. However, last week, during the Monetary Economics Conference, Andrew Bailey, the Governor of the BoE, warned that if energy costs stay high for a long time, they could become a problem for the central bank and its policy of not raising interest rates. Meanwhile, the US Dollar opened the week slightly higher. US Treasury yields remain very high, near the 19-year record of 5.23%. Next week, attention will turn to the US NFP report for September. On the daily chart, GBP/USD trades at 1.3260. The pair shows a bearish short-term outlook because price is still trading below the 20-period Exponential Moving Average (EMA), which is currently at 1.3387. At current levels, price is moving away from the July highs, where the EMA is above price and acting as overhead supply. In this situation, upside potential will be limited while this resistance level remains active. As for momentum indicators, the Relative Strength Index (14) is currently testing the 28 level, moving into oversold territory. This means that even though downside pressure prevails, the rate of decline might slow. According to analysts at UOB Group, GBP/USD extended the significant downtrend that started on Wednesday, falling to 1.3205, with the price closing the session 0.16% lower at 1.3219. Indeed, the currency pair appears strongly oversold after the drop, but the current bias toward sterling remains negative. For the short-term outlook, UOB expects that the price will continue declining in the 1.3190 to 1.3245 range. For the mid-term period, beyond 24 hours, UOB reminds readers that it made this forecast on 23 September, when the spot price was 1.3345. It is currently unclear whether GBP will fall below 1.3300. In any case, UOB had expected GBP not to break the 1.3300 level easily and fall. However, the price fell to 1.3205 in the previous trading session. Indeed, although the current weakness seems overextended, GBP may retest the June low around 1.3140 before stabilizing. On the upside, UOB notes that a break of the 1.3295 level, which previously acted as solid resistance near 1.3390, would mean 1.3140 is not reachable.