GBP/USD HOLDS NEAR 1.3240 AS USD PULLBACK OFFERS LIMITED RELIEF
GBP/USD attracted buyers near the 1.3200 level and rose toward 1.3240 during European trading, although the pair remains within a range that has been held over the past two weeks. The pair was up less than 0.10% on the day.
The US Dollar has eased following its recent rally, providing some support to GBP/USD. Traders have been pricing in tighter Bank of England policy amid sticky inflation due to elevated energy prices, which also supports the British Pound.
However, elevated US bond yields and expectations for another Fed rate hike continue to limit the upside. Markets are pricing in more than an 85% chance of another Fed rate increase by year-end, even as expectations for an October hike have eased.
The UK Construction PMI improved from 44.3 to 46.1 in September, while markets await comments from BoE MPC member Catherine Mann for further policy signals.
From a technical perspective, GBP/USD remains below the 100-period SMA at 1.3319, keeping the near-term structure cautious. Support is located around 1.3180, while a sustained move above 1.3319 would ease some of the current downside pressure.
The next major focus is the FOMC Minutes due Wednesday, which may provide further insight into the Federal Reserve’s policy outlook and influence USD direction.
For market participants, the key factors remain GBP/USD near 1.3240, the 1.3200 and 1.3180 support areas, the 1.3319 resistance level, US bond yields, Fed rate expectations, BoE policy signals and the upcoming FOMC Minutes, which may provide further context for the pair’s near-term direction.
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