British Pound edges lower against US Dollar as key US economic releases approach

• The British Pound faces mild pressure against the US Dollar as markets await US flash Q3 GDP and PCE inflation figures.
• Growth in the US economy is forecast to have accelerated to 3.2% during July-September.
• Rate hikes at the forthcoming Fed and BoE policy meetings remain a firm expectation among investors.

Modest selling pressure takes the British Pound (GBP) towards 1.3312 against the US Dollar (USD) in Thursday’s European session. A recovering US Dollar (USD) weighs on GBP/USD, as financial markets remain confident that the Federal Reserve (Fed) will raise interest rates in December, having kept them unchanged at Wednesday’s policy meeting.

At the time of writing, a marginal gain places the US Dollar Index (DXY) near 102.20. The index, which tracks the Greenback against six major currencies, had pulled back on Wednesday following three consecutive sessions of gains.

In their assessment, MUFG/BTMU analysts describe the Fed’s decision to hold the fed funds rate at "3.75–4.00%" as a widely expected pause after September’s increase. However, they emphasise that the decision "included two dissents in favour of another rate increase," signalling that a hawkish stance persists within the committee. The analysts also point out that Fed Chair Warsh "reiterated the Fed’s commitment to returning inflation to 2%".

Expectations of further policy action this year remain intact, according to MUFG/BTMU, who add that "markets continue to price around an 87% probability of a December rate hike,".

Attention on the data calendar turns to the United States (US) flash Q3 Gross Domestic Product (GDP) figures and September’s Personal Consumption Expenditure (PCE) Price Index, both due at 12:30 GMT.

Estimates put annualised US economic growth at 3.2%, up from the previous reading of 2.2%. Meanwhile, core PCE inflation, the Fed’s preferred price gauge, is expected to rise to 3.1% year-on-year (YoY), compared with 3% previously.

For the UK, the focus is on next week’s monetary policy announcement from the Bank of England (BoE). An interest rate increase of 25 basis points (bps), taking the rate to 4%, is considered almost certain.

GBP/USD Technical Analysis: Can the Pair Reclaim Its 20-Day EMA?

A slightly bearish near-term outlook persists on the daily chart, where GBP/USD trades at 1.3307, just below its 20-day exponential moving average (EMA) of 1.3318. With the pair positioned beneath this short-term average, nearby dynamic resistance continues to restrain the latest rebound. The Relative Strength Index (RSI), at around 48, points to consolidation rather than directional momentum. Failure to recover above the 1.3318 barrier therefore leaves the pair exposed to weakness.

A sustained move above the 20-day EMA at 1.3318, the immediate resistance level, would reduce downward pressure and create scope for a wider recovery. The available dataset offers no clear support indicators, so traders may use recent chart lows as reference points. Even so, the key technical question remains whether GBP/USD can clear the 1.3318 ceiling and overturn the prevailing bearish tone.

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