GBP/USD Holds Below 1.3200 as Renewed US Dollar Strength Caps Upside

Fundamental Overview

GBP/USD remains confined below the 1.3200 level in Monday’s European session, with upside momentum limited by fresh demand for the US Dollar. Despite a mild recovery, Sterling sentiment remains fragile amid persistent UK fiscal concerns and weaker domestic data.

While the US Dollar is stabilizing after the end of the 43-day government shutdown, broader concerns over slowing US growth and soft labour indicators continue to cloud the outlook. Economists estimate the shutdown may have reduced quarterly GDP by up to 2%, reinforcing expectations for further Fed easing—although recent Fed commentary has sounded more cautious.

In the UK, preliminary GDP figures showed only 0.1% growth in Q3, below forecasts, while September output slipped 0.1%, strengthening the case for a Bank of England rate cut next month. Market attention now turns to upcoming FOMC speeches and the November 26 UK budget, where tax increases are expected.

GBP/USD Technical Analysis – Daily Chart

Technical Overview

• GBP/USD trades within a downward channel.
• The pair remains below all major SMAs, reinforcing bearish pressure.
• RSI sits in the neutral zone, while Stochastic shows a neutral bias.
• Immediate Resistance: 1.3241
• Immediate Support: 1.3081

Trading Outlook

On the higher timeframe, GBP/USD posted a strong rally before being firmly rejected at resistance. A second rejection confirms bearish dominance. The pair has now broken below a key support zone and is retesting it. A rejection from this level would likely reaffirm downside continuation.

Trade Suggestion:
Limit Sell: 1.3215
Take Profit: 1.3102
Stop Loss: 1.3287

Frequently Asked Questions (FAQ)

Q1: Why is GBP/USD struggling below 1.3200?
Renewed US Dollar strength and ongoing UK fiscal concerns are suppressing bullish momentum.

Q2: How did the weak UK GDP data affect the Pound?
Slower growth increased the likelihood of a BoE rate cut, keeping pressure on GBP.

Q3: Why is the US Dollar gaining ground again?
Cautious Fed messaging and reduced expectations of imminent rate cuts are supporting the Greenback.

Q4: What technical levels are most important right now?
Key levels to watch are 1.3241 (resistance) and 1.3081 (support).

Q5: Could GBP/USD decline further this week?
Yes—if the pair fails to break above resistance, bearish continuation remains likely.

Disclaimer

This report is for informational purposes only and does not constitute financial or investment advice. Market conditions can change rapidly, and all trading involves risk. Always conduct your own analysis or consult a licensed financial professional before making trading decisions.