GBPUSD:
Sterling hovers near 1.34, but the fundamental balance of forces favors the dollar. Market participants compare potential slowing in US activity with risks in the UK: budget concerns, pressure on household spending, and the Bank of England’s cautious stance. In the absence of new, strong pro-GBP drivers, short-term demand for USD persists.
The US side adds support to the dollar via steady demand for safe assets and expectations of an imminent Fed decision later in October. Even if a moderate rate cut materializes, the desynchronization in the pace of easing between the Fed and the BoE offers the pound few advantages, especially as UK inflation remains above target and tempers confidence in rapid borrowing-cost reductions in Britain.
Net-net, the fundamental backdrop argues for a moderate pullback in GBPUSD. Any short-lived risk-on bursts look fragile: as US newsflow strengthens and dollar inflows continue, upside breakouts in the pound appear limited.
Trade recommendation: SELL 1.3415, SL 1.3495, TP 1.3300
Origin: FreshForex
