GBP/USD has rebounded from 1.3135, but ActionForex says the move looks more like a Dollar retreat than Sterling strength. A November Bank of England hike stays priced, while EUR/GBP and GBP/CHF have not confirmed a broader Sterling recovery.
GBP/USD has rebounded sharply from 1.3135, a low reached on October 14 after the hotter-than-expected US CPI report. However, ActionForex says the broader currency picture suggests Dollar weakness has been the principal driver.
Dollar slips while the Pound breaks resistance
The Dollar index slipped toward 101.80, a ten-day low, after reversing from 102.945. Federal Reserve Chairman Kevin Warsh declined to signal whether the Fed would raise rates in October or December, and the source says the Dollar's decline was already underway before he spoke.
On the chart, GBP/USD broke above 1.3274 resistance, which ActionForex says confirms a short-term bottom at 1.3135. Further recovery is favored toward 1.3341, the 38.2% Fibonacci retracement of the decline from 1.3675 to 1.3135.
November BoE hike stays priced
The Bank of England held Bank Rate at 3.75% in September by a 6–3 vote. A Reuters poll found that 54 of 63 economists expect a 25bps increase to 4.00% at the November 5 meeting. Market pricing puts the chance of a 25bps hike at 81.6%.
Governor Andrew Bailey said in Bangkok that evidence of second-round inflation effects from higher energy prices had been "quite subdued" so far. He also said the UK economy is proving more resilient than the BoE had expected. Meanwhile, August GDP rose 0.1% mom, beating expectations for a 0.1% contraction.
EUR/GBP and GBP/CHF withhold confirmation
Sterling's crosses have not backed the rally. EUR/GBP's decline has stalled after reaching 0.8425, and bullish divergence in the four-hour MACD suggests its downward momentum is weakening. GBP/CHF continues consolidating below 1.1105.
ActionForex says a more convincing Sterling-specific move would need EUR/GBP to break below 0.8425 and GBP/CHF to clear 1.1105. Until then, GBP/USD could extend toward 1.3341, or potentially 1.3469, without signaling a broader shift in Sterling sentiment.
Source: ActionForex
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