Sterling Drops as GBP/USD Tests Lower End of Range

Key Moments

Dollar Strength Keeps GBP/USD on the Back Foot

The GBP/USD pair remains weak, hovering around the 1.3200 level during the Asian session on Thursday and trading close to the low reached last week, which was the weakest level since late June.

The US Dollar maintains a firm tone near an 18-month high, underpinned by the Federal Reserve’s hawkish policy outlook, elevated US Treasury yields, and ongoing geopolitical uncertainty. These factors continue to act as a drag on GBP/USD. At the same time, expectations for further monetary tightening by the Bank of England provide some support to the British Pound and help curb a more pronounced decline.

Technical Picture: Bearish Consolidation Within a Defined Range

From a technical standpoint, the pair’s largely sideways movement over roughly the past two weeks is viewed as a consolidation phase within a broader downtrend that started from the August swing high. The upper boundary of this consolidation band aligns with the 100-period Simple Moving Average on the 4-hour chart, indicating that upside attempts remain vulnerable while the broader bias tilts lower.

The Moving Average Convergence Divergence indicator remains below the zero line and shows a mildly contracting pattern, suggesting that bearish momentum persists, though not in an aggressive fashion. The Relative Strength Index stands at 41.7, under the midpoint, supporting a slightly negative directional bias. Taken together, these signals support the prospect of a break below the range floor near 1.3180.

A clear move through that support would point to a continuation of the decline that began from the August monthly swing high around 1.3675. On the upside, the 1.3285 confluence zone is expected to present a significant barrier to any recovery attempts. A sustained break above that region would be required to reduce selling pressure and signal a potentially more constructive phase for GBP/USD.