Key Moments
- GBP/USD traded around 1.3230-1.3225 during the Asian session, hovering near its lowest level since early July.
- Stronger expectations for another Fed rate increase kept 10-year US Treasury yields close to their highest level since 2007 and supported the US Dollar.
- The Bank of England’s cautious stance and mixed UK business activity data continued to restrain demand for the British Pound.
Downside Pressure Persists on GBP/USD
The GBP/USD pair extended its bearish tone for a fourth consecutive session, trading in a narrow range around 1.3230-1.3225 during the Asian session on Thursday. The pair remained close to the early-July low reached the previous day, with the broader backdrop still pointing toward further weakness. However, selling momentum appeared somewhat subdued as market participants awaited a key meeting between US President Donald Trump and Chinese President Xi Jinping.
US Dollar Supported by Fed Expectations and Strong Data
The US Dollar held on to the previous day’s solid advance, trading near a two-week high as market positioning continued to favor another interest rate hike by the Federal Reserve. Those expectations were reinforced by the latest S&P Global data, which showed US business activity accelerating for a fourth consecutive month in September and posting the fastest growth rate since July 2021.
This improvement in activity kept the yield on the benchmark 10-year US Treasury near its highest level since 2007, providing ongoing support for the Greenback. The firm USD backdrop has been a primary driver behind the recent weakness in GBP/USD.
BoE Caution and UK Data Undermine Sterling
In contrast, the British Pound continued to struggle for meaningful buying interest. The Bank of England’s more cautious approach, which leans toward holding or gradually easing policy amid stagflation concerns, weighed on sentiment toward the currency.
Additionally, a mixed UK business activity report released on Wednesday kept bullish GBP positioning limited and reinforced the softer tone in GBP/USD. The increasingly divergent outlook between the Fed and the BoE supported a negative near-term view on the pair and argued for a potential continuation of the established downtrend seen over roughly the past month.
Technical Picture: Bears Maintain the Upper Hand
On the technical front, GBP/USD continued to trade with a bearish bias below the 100-day Simple Moving Average (SMA) and pushed further under the 78.6% Fibonacci retracement level. The nearest notable support is located at the recent swing low of 1.3139, which serves as an important floor for the current downward move.
On the upside, initial resistance stands at the 78.6% Fibonacci retracement at 1.3254. Above that, the 61.8% retracement at 1.3344 is the next hurdle. Further resistance is clustered around the 50.0% retracement level at 1.3408 and the 100-day SMA at 1.3428, forming a dense barrier ahead of the 38.2% retracement at 1.3471 and the 23.6% Fibonacci level at 1.3549.





