GBP/USD Holds Above 1.3200 as Traders Weigh Fed Path

Key Moments

GBP/USD finds buying interest near 1.3200 during the Asian session, keeping the pair locked in its roughly three-week trading range.
Stronger BRC Like-For-Like Retail Sales data and comments from BoE member Megan Greene provide support for the British Pound.
Technical signals point to a bearish consolidation, with price capped below the 100-period SMA on the 4-hour chart and support around 1.3180 in focus.

Range Trading Persists Around 1.3200

The GBP/USD pair attracts fresh dip-buying near the 1.3200 area during the Asian session on Tuesday, halting the previous session’s pullback from the 100-period Simple Moving Average (SMA) on the 4-hour chart. Despite the intraday bounce, the pair continues to trade within a well-established range that has contained price action for about three weeks, keeping investors cautious about positioning for a sustained move higher.

Fundamental Support for Sterling

The British Pound gains some traction after the release of better-than-expected British Retail Consortium (BRC) Like-For-Like Retail Sales figures. Sentiment toward GBP is further bolstered by remarks from Bank of England (BoE) policymaker Megan Greene, who noted that she is concerned about second-round inflation effects if the central bank does not act in a timely manner. These factors help underpin demand for GBP against the US Dollar.

In addition, a modest round of profit-taking in the US Dollar from its recent advance – which had lifted it to an 18-month high on Monday – provides another tailwind for GBP/USD. The pullback in the greenback encourages buyers to step in on dips, helping the pair defend the 1.3200 handle.

US Dollar Still Backed by Fed Expectations and Geopolitics

Despite the latest pause in its rally, the downside in the US Dollar appears limited. Market participants increasingly accept that the Federal Reserve is likely to raise interest rates again by the end of this year, lending support to the currency. Ongoing inflation risks tied to volatile energy prices also underpin elevated US bond yields, reinforcing the Dollar’s appeal.

Moreover, geopolitical tensions continue to provide a safe-haven bid for the USD. The backdrop includes the US-Iran standoff and intensifying clashes between the Iran-backed Houthi movement and the Saudi-led coalition in Yemen. This risk premium may restrict deeper Dollar losses and, in turn, cap further gains in GBP/USD.

Technical Picture: Bearish Bias Within a Sideways Pattern

From a technical standpoint, the current sideways movement in GBP/USD can be viewed as a bearish consolidation phase following the decline from the August swing high. The pair is trading below the 100-period SMA on the 4-hour chart, and this moving average around 1.3255 continues to act as a key resistance level. With momentum indicators subdued, rallies are likely to struggle while this barrier is intact.

The Relative Strength Index (RSI) is hovering just under the 50 threshold, and the Moving Average Convergence Divergence (MACD) histogram is marginally negative. These readings reinforce a cautious stance and keep the focus on a potential downside break from the prevailing range.

Technical Indicator / Level	Signal / Value
Key support (range floor)	Near 1.3180
Key resistance (100-period SMA, 4-hour)	1.3255
Psychological resistance	1.3300
RSI (4-hour)	Just below 50
MACD (4-hour)	Marginally negative
August swing high reference	Near 1.3675

Levels to Watch: 1.3180 Support and 1.3300 Resistance

The technical configuration favors the prospect of an eventual break below support around 1.3180, which would clear the way for a further decline and extend the move lower from the August monthly swing high near 1.3675. A confirmed downside break of the range floor would strengthen the bearish outlook.

On the upside, any recovery attempts are expected to encounter selling pressure around the 100-period SMA and likely stall before the 1.3300 round figure. A decisive move and sustained trading above 1.3300 would be required to neutralize the current bearish tone and signal scope for a more meaningful advance.