GBP/USD Near Three-Month Low as BoE Hike Expectations Lose Support

Traders' Opinions

Summary:

GBP/USD remains near a three-month low around 1.3220 as markets question aggressive BoE tightening while expectations for further Fed hikes continue to support the Dollar.

SELL GBPUSD

EXP

TRADING

1.32500

Entry Price

1.31400

1.34500

1.32549 +0.00377 +0.29%

0.0

Pips

Flat

1.31400

Exit Price

1.32500

Entry Price

1.34500

The British Pound remains under pressure on Friday, with GBP/USD hovering around 1.3220 after briefly approaching the 1.3200 area, its weakest level in almost three months. Sterling has struggled throughout the week and is down roughly 1.27% against the US Dollar, reflecting an increasingly unfavorable shift in rate expectations.

A key source of pressure is growing skepticism over how aggressively the Bank of England will need to tighten policy. Markets currently price roughly 100 basis points of additional BoE hikes over the coming 12 months, which would lift Bank Rate from 3.75% to around 4.75%. However, BBH strategists argue that this may overstate the amount of tightening ultimately required.

Their assessment points to an economy already operating below capacity, while the existing 3.75% Bank Rate sits close to the upper end of the BoE's estimated neutral range of 2%-4%. Expectations for tighter fiscal policy add another potential restraint on demand, reducing the case for the central bank to deliver the full amount of tightening currently priced by markets.

At the same time, the US Dollar continues to benefit from a contrasting monetary-policy backdrop. Expectations for additional Federal Reserve rate increases have strengthened following persistent warnings from policymakers about elevated inflation. Stronger-than-anticipated September US S&P Global PMI figures have added to that argument by highlighting continued resilience in the American economy.

The CME FedWatch tool now indicates an almost 58% probability that the Fed raises rates at both remaining policy meetings this year, helping maintain upward pressure on US yields and keeping demand for the Dollar firm.

The combination leaves GBP/USD caught between softer confidence in aggressive BoE tightening and increasingly hawkish expectations for the Fed. Unless that policy divergence begins to narrow, Sterling may struggle to generate a sustained recovery from its recent lows.

Technical Analysis

GBP/USD remains firmly tilted to the downside on the 4-hour chart, with price action continuing to form a clear sequence of lower highs and lower lows. The pair is trading around 1.3245 after breaking beneath the important 1.3275–1.3290 support zone, reinforcing the deterioration in the broader structure.

The latest decline has been particularly aggressive, pushing Sterling through several previously established support areas. The former 1.3275–1.3290 demand zone is now likely to act as resistance should price attempt a short-term recovery. The chart suggests such a corrective rebound is possible, potentially carrying GBP/USD back toward 1.3260–1.3280, but the broader setup continues to favor selling pressure from higher levels.

Failure to reclaim that broken zone would leave sellers firmly in control. Below the recent low around 1.3200–1.3210, attention shifts toward the next major demand region around 1.3135–1.3150. This could temporarily slow the decline, although the projected structure suggests that any recovery from there may remain corrective.

A sustained break beneath 1.3135 would expose the 1.3040–1.3050 region, which represents the next major downside objective visible on the chart.

On the upside, the bearish outlook would begin to weaken if GBP/USD recovers above 1.3290, while a stronger reversal would require a move back through the 1.3390–1.3410 resistance area. Until then, rebounds remain vulnerable to renewed selling.

Overall, the chart favors a brief correction followed by bearish continuation, with 1.3140 representing the first major target before the possibility of an extension toward 1.3050.

TRADE RECOMMENDATION

SELL GBP/USD

ENTRY PRICE: 1.3250

STOP LOSS: 1.3450

TAKE PROFIT: 1.3140

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GBP/USD Near Three-Month Low as BoE Hike Expectations Lose Support

Technical Analysis

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