GBP/USD Price Forecast: Bullish bias remains intact as key support holds ahead of BoE decision

• At around 1.3490, GBP/USD remains in positive territory in early European trading on Thursday.
• Trading above the 100-day SMA keeps the pair’s outlook favourable, supported by bullish RSI momentum.
• Resistance is first seen at 1.3505, while initial support stands at 1.3390.

Near 1.3490, GBP/USD is holding gains as Thursday’s European session gets under way. Following the Democrats’ takeover of the US Congress in the midterm elections, the US Dollar (USD) has weakened against the British Pound (GBP).

Control of both the Senate and the House of Representatives has passed from Republicans to Democrats, who secured majorities in each chamber. Tens of millions of voters delivered a sharp rebuke to President Donald Trump, handing Democrats significant victories in several Republican strongholds for the first time in decades.

Ray Attrill, head of FX strategy at National Australia Bank, linked the market reaction to the election outcome: "A lot of the market moves that we're seeing, particularly in bonds, I think can be traced directly to that, as well as a weaker dollar on the back of lower Treasury yields,"

Economists surveyed by Reuters expect the Bank of England (BoE) to lift Bank Rate from 3.75% to 4% at its November policy meeting, which would be the first increase since August 2023. The decision, due later on Thursday, will be a key focus for markets.

Alongside an increase this month, financial markets are pricing in at least three quarter-point rate rises next year. That path would leave UK interest rates above the levels projected for the US.

Pound follows Euro gains as attention turns to BoE decision

Scotiabank strategists describe Sterling’s advance against the Dollar as closely aligned with the single currency’s, noting “the GBP … pacing the EUR’s gains versus the USD, rising around 0.4% intraday.” The latest activity figures provided little additional direction, they say, as “final UK Services and Composite PMI data for October were revised slightly lower to 52.8 and 52.9 respectively.” For Scotiabank, the focus is moving to monetary policy: “beyond the USD fallout from the mid-terms, GBP attention will quickly shift to tomorrow’s BoE policy decision,” with “a ¼ point hike is all but fully priced in at this point, with swaps anticipating a further 75bps of tightening from the BoE beyond tomorrow over the next year or so.”

Technical Outlook: GBP/USD holds above the 100-day SMA as bullish bias persists

With spot trading above both the 100-day Simple Moving Average (SMA) and the middle band of the 20-day Bollinger Bands, the daily GBP/USD chart continues to favour the upside. The pair is pushing into the upper half of its recent range, although the upper Bollinger band presents an immediate obstacle. A Relative Strength Index (14) reading of about 66 confirms solid positive momentum, while also suggesting that the pair is approaching overbought territory.

The upper Bollinger band, around 1.3505, provides the first resistance on the upside. Should the pair close above it on a daily basis, the next objective would be the 15 July high of 1.3558, followed by the 25 August high of 1.3655.  

The 100-day SMA at 1.3390 offers significant support, ahead of the middle Bollinger band near 1.3345. Falling below these levels would undermine the bullish structure and bring the lower Bollinger band, close to 1.3185, into view.

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