Above 1.3350: GBP/USD stays firm as key moving average caps gains | Price Forecast

• 1.3385 is the level around which GBP/USD trades with gains. The pair remains positive in early European trading on Monday.
• Below the 100-day SMA, the pair retains a bearish bias, while a neutral RSI leaves scope for further consolidation.
• At 1.3395 lies the first upside objective, while 1.3355 provides initial support.

1.3385 is the level GBP/USD approaches as it strengthens. The advance comes in Monday’s early European session, with a hawkish rate increase by the Bank of England (BoE) lending some support to the British Pound (GBP) against the US Dollar (USD).

For the first time in over three years, the UK central bank raised its benchmark interest rate, adding 25 basis points (bps) to bring it to 4.00%. Governor Andrew Bailey identified the Middle East war and the resulting rise in energy prices as the main consideration for future rate decisions.

Although oil prices fell as markets reacted to the US midterms, Bailey said this would not have altered the decision already taken. He acknowledged, however, that it "obviously" affects his outlook.

The BoE’s growth and inflation forecasts included upward revisions to growth projections for this year and next, to 1.6% and 1.3%, respectively. Both exceed the projections from the government’s Office for Budget Responsibility.

4.00% BoE rate steadies Sterling; Fed range matched, inflation risks persist

The latest tightening move brought the BoE’s bank rate up by "25 bps to 4.00%, matching the upper bound of the 3.75-4.00% Fed Funds Rate range.", ABN Amro analysts point out. Committee support was strong, they note: "eight members" voted for the increase, while "one preferred a 50-bps increase," highlighting a policy bias that remains hawkish.

Geopolitics remains a crucial condition for the BoE’s policy trajectory, ABN Amro suggests. The bank notes that the MPC "projected inflation to reach around 5% by mid-2027 and signalled another increase unless the Middle East conflict is resolved," linking the outlook to developments in the conflict.

4.2/10 speech score: BoE’s Pill adds rate uncertainty to Pound outlook

At 4.2/10, the FXS Speechtracker score is substantially below Pill’s historic average of 6.4/10. It indicates a more guarded message with less conviction. His insistence that next year’s interest rates are not predetermined, together with his rejection of a preset upward trajectory from spring, represents a dovish move away from the tightening bias previously implied.

Downside risks for the Pound are reinforced by the prospect of Bank Rate remaining unchanged, or even declining if growth falters, alongside the emphasis on margin compression as a key determinant. By making policy conditional on corporate pressures and economic growth, this stance encourages markets to reduce expectations of sustained rate increases and reconsider carry trades that support the Pound.

100-Day SMA Caps GBP/USD: Technical Analysis Retains Bearish Bias

Just below the 100-day simple moving average (SMA), GBP/USD shows a mildly bearish bias on the daily chart, with upside constrained. Prices remain in the upper half of the Bollinger envelope, supported nearby by the 20-day SMA, which forms the middle band. A Relative Strength Index (14) reading of 52.5 is near neutral, pointing to consolidation rather than a clear continuation of the trend.

The 100-day SMA at 1.3395 presents the first resistance, ahead of a firmer hurdle at the upper Bollinger band around 1.3490. Sustained buying beyond that level could lift the pair towards 1.3558, the high recorded on 15 July. 

Around 1.3355, the middle Bollinger band provides the nearest support. Below it lies the 28 October low of 1.3272, while a more pronounced retreat would target the lower Bollinger band near 1.3225. 

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