GBP/USD starts the new week of October at 1.3237. The pound is seizing every opportunity to rebound from three-month lows after a weak US labour market report put pressure on the dollar.
The US economy added just 29,000 jobs in September, compared with expectations of 90,000. This has reinforced expectations that the Federal Reserve could leave rates unchanged in October, with the probability of a move in December now appearing higher.
In the UK, markets are now pricing in approximately 30 basis points of Bank of England policy tightening before year-end and around 90 basis points by the end of 2027. Several Bank of England officials, including Andrew Bailey, have recently signalled greater openness to the possibility of raising rates if high energy prices persist, reflecting concerns that inflation could remain above target for longer.
Additional support for the pound came from Prime Minister Andy Burnham’s comments in favour of closer UK ties with the EU ahead of a summit expected around 20 November. The possibility of revisiting EU membership around the next general election is also being discussed.
Technical Analysis
On the H4 GBP/USD chart, the pair maintains a steady downward structure. Following a corrective move towards resistance at 1.3303, the market resumed its decline and returned to the 1.3201 area. The price remains within the descending channel, while the sequence of local highs confirms continued selling pressure.
The main scenario envisages a continuation of the third downward move, with an initial target at 1.3180. A break and consolidation below this level could open the way for a decline towards 1.3108 and subsequently 1.3044. The 1.3303 level remains key resistance and the invalidation point for the current bearish scenario.
The MACD indicator supports the bearish scenario. It remains in negative territory, while its structure continues to point downwards. At the same time, the shrinking negative histogram suggests that a local correction is possible before another downward move.
On the H1 GBP/USD chart, the market completed its corrective rise around 1.3252 and developed renewed downward momentum. The nearest support is at 1.3185. A break below this level could open the way for a decline towards 1.3108 and subsequently 1.3044. The Stochastic oscillator has fallen well below 50 and is approaching the oversold zone, confirming strong short-term selling momentum. A technical pause or slight correction is therefore possible around 1.3185. However, while the price remains below 1.3252 and particularly below 1.3303, the main direction for the upcoming trading session remains downwards. A return above 1.3252 would temporarily ease selling pressure but would not alter the overall bearish structure on H1.
Conclusion
GBP/USD has edged higher as the pound attempts to recover from three-month lows, supported by a weak US jobs report that has reduced expectations of an October Fed rate hike. Markets now see a higher probability of a move in December.
In the UK, expectations of BoE tightening have increased, with policymakers including Andrew Bailey signalling greater openness to rate hikes if high energy prices persist, amid concerns that inflation could remain above target for longer. Political developments, including Prime Minister Andy Burnham’s push for closer ties with the EU, have also supported the pound.
From a technical perspective, GBP/USD remains bearish below 1.3252 and 1.3303. The main H4 scenario envisages a decline towards 1.3180, with a break and consolidation below this level potentially opening the way towards 1.3108 and subsequently 1.3044. A return above 1.3252 would ease short-term selling pressure but would not alter the broader bearish structure, while 1.3303 remains the invalidation point for the current bearish scenario.
