Just below 1.3400: British Pound trades sideways near 16 September highs as USD remains subdued

Several supportive factors keep GBP/USD holding on to its recent substantial gains.
BoE rate hike expectations underpin the GBP as lower US bond yields weigh on the USD.
A hawkish Fed and geopolitical risks could cushion the USD and constrain the pair's upside.

GBP/USD trades just below 1.3400. During Thursday's Asian session, the pair is consolidating its gains near the highest level since 16 September, reached earlier this week. Fundamentals appear to favour buyers, supporting the prospect of extending the uptrend that began a week ago.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

With US bond yields declining, the US Dollar (USD) remains near Tuesday's almost three-week low and has attracted little meaningful buying interest. By contrast, rising confidence in a November interest rate increase by the Bank of England (BoE) is supporting the British Pound (GBP). That view gained traction after UK consumer price inflation reached an 11-month high in September. Together, these factors reinforce the positive outlook for GBP/USD.

The possibility of a further escalation in Middle East tensions continues to sustain a geopolitical risk premium. Iran's Foreign Minister Abbas Araghchi said Tehran is willing to give diplomacy another chance, provided it sees strong evidence that the US sincerely wants a just solution. In a separate report, The New York Times said the US and Israel have prepared plans for a possible further round of strikes on Iran after the US midterm elections.

By supporting crude oil prices, these risks add to inflation concerns and reinforce expectations of an imminent interest rate increase by the Federal Reserve (Fed). CME Group's FedWatch Tool currently puts the probability priced in by traders of a December rise in US borrowing costs at around 90%. This helps cushion the safe-haven US Dollar's downside, discouraging traders from initiating fresh bullish GBP/USD positions or positioning for additional gains.

Daily GBP/USD chart

Technical Outlook

Trading just above its 100-day Simple Moving Average (SMA), GBP/USD retains a broadly neutral near-term bias, although a tentative base may be forming above this dynamic support. The pair is confined between immediate resistance at the 50.0% Fibonacci retracement of 1.3404 and the lower 38.2% retracement of 1.3341. This points to consolidation while traders wait for a clearer directional breakout.

Beyond immediate resistance, the next upside hurdles are the 61.8% retracement near 1.3467 and the 78.6% retracement at 1.3557, followed by the swing high area at 1.3672. Initial support lies at the 100-day SMA of 1.3389, ahead of the 38.2% retracement at 1.3341. Below that, a break would bring the 23.6% level near 1.3263 into view. The structural low around 1.3137 provides a more distant support floor.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

7 Days: Pound Sterling Performance

Over the last 7 days, the British Pound (GBP) recorded its strongest performance against the US Dollar. The table below sets out its percentage changes against the major currencies listed.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.71%	-1.51%	-0.08%	-1.37%	-0.81%	-1.98%	-1.32%
EUR	0.71%		-0.84%	0.59%	-0.75%	-0.10%	-1.28%	-0.65%
GBP	1.51%	0.84%		1.40%	0.11%	0.71%	-0.54%	0.22%
JPY	0.08%	-0.59%	-1.40%		-1.21%	-0.69%	-1.87%	-1.19%
CAD	1.37%	0.75%	-0.11%	1.21%		0.52%	-0.67%	0.11%
AUD	0.81%	0.10%	-0.71%	0.69%	-0.52%		-1.17%	-0.48%
NZD	1.98%	1.28%	0.54%	1.87%	0.67%	1.17%		0.66%
CHF	1.32%	0.65%	-0.22%	1.19%	-0.11%	0.48%	-0.66%

This heat map compares percentage movements across the major currencies. Select the base currency in the left-hand column and the quote currency in the top row. For instance, choosing the British Pound on the left and following its row across to the US Dollar gives the percentage change for GBP (base)/USD (quote) in the corresponding cell.