Technical Analysis

GBP/USD Price Analysis – Oct 30, 2023

By LonghornFX Technical Analysis
Oct 30, 20234 min

Daily Price Outlook

The GBP/USD pair is struggling to make significant moves and is trading around the 1.2100 mark during the European session on Monday. Traders seem to be exercising caution, opting to wait on the sidelines in anticipation of significant central bank events scheduled for this week. Investors are anticipating the FOMC decision on Wednesday, followed by the Bank of England (BoE) meeting on Thursday.

These events are considered significant risk factors, which is why traders are refraining from making hasty moves at the moment. They are adopting a more cautious, wait-and-see approach, which has resulted in the pair maintaining a relatively tight trading range.

Federal Reserve's Monetary Policy and Its Impact on GBP/USD

It's worth noting that the Federal Reserve (Fed) is anticipated to maintain its current policy and keep interest rates unchanged for the second consecutive time in November. Nevertheless, there are still some market expectations that they could potentially raise rates later this year. This possibility is supported by recent positive US economic data, which signals a robust economy.

Furthermore, the Commerce Department's report on increased spending and persistent high inflation provides the Federal Reserve with a justification to maintain its somewhat stringent stance on monetary policy. All of this underpins the notion of higher US Treasury bond yields, which is favorable for the US Dollar (USD) but less so for the GBP/USD pair.

Bank of England and GBP/USD Outlook

Additionally, the Bank of England (BoE) is also anticipated to maintain its benchmark interest rates at 5.25%, the highest level in 15 years. This decision is prompted by concerns regarding the potential for a recession. However, the BoE is expected to stay resolute in its efforts to combat high inflation and may even suggest the possibility of further tightening measures in the future.

This uncertainty is causing traders to exercise caution in making substantial bets on the British Pound (GBP), which explains the GBP/USD pair's price remaining within a specific range.

The absence of strong buying momentum suggests that the path of least resistance for prices is likely downwards. If you're considering taking a bearish position on the GBP, it's a wise strategy to wait until it falls below the 1.2100 level before initiating any new trades.

Monday Market Overview

Moving forward, there will not be any significant economic news scheduled for Monday that could disrupt the markets in both the UK and the US. Therefore, US bond yields will continue to influence the trajectory of the US Dollar, potentially creating short-term trading opportunities with the GBP/USD pair. Additionally, traders will also keep an eye on the overall market mood, which tends to affect the demand for the safe-haven US Dollar.

GBP/USD Price Chart – Source: Tradingview
GBP/USD Price Chart – Source: Tradingview

GBP/USD - Technical Analysis

The GBP/USD currency pair, often referred to as 'Cable', remains a central topic of discussion in the forex markets, especially given the ongoing geopolitical events influencing both currencies. As of October 30, the GBP/USD is trading at 1.21137, showing a minor decline of 0.04% within the last 24 hours. The pair's liquidity and volume, transacted in millions and billions, make it one of the most traded currency pairs globally, reflecting its high importance in the forex world.

Diving into the critical price levels, the GBP/USD has its pivot point stationed at 1.2152. On the resistance frontier, traders should be eyeing levels of 1.2193, followed by 1.2229 and then 1.2274. Conversely, for those looking for potential support regions, levels to watch include 1.2099, 1.2052, and a deeper support at 1.2020. From a technical indicators standpoint, the RSI sits at 43, indicating a bearish sentiment as it lies below the 50 threshold. This could signal caution among traders, reflecting potential bearish undertones. Additionally, the 50 EMA for the pair is positioned at 1.2149. Given that the GBP/USD's current price is marginally below this level, this suggests the presence of a short-term bearish trend.

While specific chart patterns aren't detailed in the provided data, they play a pivotal role in determining potential price actions. Recognized patterns can give traders insights into possible future movements, aiding in decision-making processes.

To wrap up, the prevailing sentiment for the GBP/USD pair leans towards the bearish side, especially when the asset is trading below the critical 1.2150 threshold. However, the fluid nature of forex markets and the geopolitical influences on the GBP and USD mean that traders should remain attentive to news and global events that could dictate the pair's future course.

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