GBP/USD Forecast: Can the Rally Extend?

15 小時前

GBP/USD edged lower in European trading on Monday (October 21), but remained above 1.30.

Attention turns to the upcoming data release as the UK consumer price index fell markedly to 1.7% from a year earlier, below market expectations of 1.9% and the BOE's 2% target. Thursday's flash U.K. Purchasing managers Index and BOE Governor Bailey's speech at IMF meetings on Tuesday and Thursday will be closely watched for clues on the path of U.K. monetary policy and the health of the economy.
The upcoming GBP monetary policy decision coincides with the Fed decision on November 7th, following the US election on November 5th and expected market volatility. Markets appear to have already priced in the BOE rate cut, but Bailey's statement this week could drive further moves. Meanwhile, both the US Dollar index and EURUSD are showing signs of momentum drying up, pointing to a possible reversal, which could support continued bullish sterling.

Despite the recent pressures, GBP/USD remains above the 1.30 mark supported by a 15-year consolidation pattern. The bullish outlook will remain intact unless a close below the 1.30-1.29 area is confirmed.

Technical Analysis
The pound is currently rebounding from the upper boundary of its 15-year consolidation and a trendline connecting the lower highs between 2014 (1.7191) and 2021 (1.4250).

In addition to the importance of the following alignment, based on the history of the monthly time frame, the bearish engulf pattern as well as the oversold RI indicators suggest a bearish reversal, leaving a scenario in the following way:

An optimistic scenario

If the 1.30-1.29 support area holds, the pound may break higher and return to the 1.34 and 1.37 price zones.

A pessimistic scenario

A close below 1.2930 would suggest further losses, with potential support at 1.2570 and 1.22.