GBP/USD Slips Below 1.3350 as Traders Brace for Fed Decision

Traders' Opinions

Summary:

GBP/USD falls below 1.3350 as investors reduce short US Dollar positions ahead of the Fed meeting. Expectations of a November BoE rate hike may cushion Sterling, while US PCE inflation data could influence December rate expectations.

SELL GBPUSD

EXP

TRADING

1.33450

Entry Price

1.31850

1.34500

1.33527 -0.00184 -0.14%

0.0

Pips

Flat

1.31850

Exit Price

1.33450

Entry Price

1.34500

GBP/USD extended its pullback on Monday, slipping below 1.3350 as investors reduced bearish US Dollar positions ahead of Wednesday’s Federal Reserve meeting. The pair has retreated around 0.5% from last week’s peak of 1.3419, although expectations of a November Bank of England rate hike continue to provide underlying support for Sterling. With major central bank decisions approaching, traders appear reluctant to establish strong directional positions.

The US Dollar has regained some ground as markets reassess the timing of the Fed’s next policy move. The central bank is widely expected to hold interest rates steady on Wednesday, allowing policymakers more time to evaluate the effects of September’s rate increase. Expectations of consecutive hikes have faded, but futures markets still assign roughly an 80% probability to another quarter-point increase in December. Thursday’s Personal Consumption Expenditures inflation report will be important in determining whether those expectations remain justified.

Sterling, meanwhile, continues to draw support from expectations that the Bank of England will raise rates by 25 basis points next week. Stronger-than-expected UK GDP growth and an upside surprise in September inflation have strengthened the case for further tightening. Societe Generale considers a November increase highly likely, arguing that stronger consumer and producer price inflation, alongside firmer wage growth, could heighten concerns about persistent inflation and prompt a more hawkish response from policymakers.

This creates a mixed near-term outlook for GBP/USD. A firmer Dollar ahead of the Fed announcement may keep the pair under pressure, particularly if investors continue trimming short positions. However, the prospect of a BoE rate increase could limit Sterling’s downside and make a deeper reversal more difficult to sustain. The Fed’s policy statement and subsequent commentary will be crucial in determining whether the Dollar’s recovery develops into a broader move or fades once the decision is delivered.

Technical Analysis

GBP/USD is showing signs of a bearish reversal after failing to sustain its advance toward the 1.3400–1.3415 resistance zone. The pair has formed several rejections near this area, followed by lower highs that indicate weakening bullish momentum. The latest bearish candle has pushed price toward 1.3346, breaking below the nearby 1.3360–1.3365 support zone. This breakdown suggests sellers are gaining control after the previous upward move.

The immediate focus is whether the former support around 1.3360–1.3370 now acts as resistance. A modest pullback into this area followed by rejection would strengthen the bearish continuation setup. The next important support lies around 1.3268–1.3282, where price could pause or attract temporary buying interest. If selling pressure persists and this zone breaks, the chart points toward a deeper decline into the 1.3175–1.3190 support region.

The overall H4 structure favors further downside while GBP/USD remains below 1.3400–1.3415 and fails to reclaim the broken support area. However, traders should watch for a false breakdown: a sustained recovery above 1.3370 would weaken the immediate bearish signal, while a move back above 1.3415 would significantly challenge the current setup. With price already moving lower, a retest and rejection near broken support would offer stronger confirmation than chasing the initial bearish candle.

TRADE RECOMMENDATION

SELL GBP/USD

ENTRY PRICE: 1.3345

STOP LOSS: 1.3450

TAKE PROFIT: 1.3185

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