GBPUSD:
The pound is stabilizing and trying to recoup earlier losses as the US dollar weakens on expectations of a Fed rate cut at the end of October. Communications from Fed officials about prioritizing labor market conditions and taking time to evaluate the economy amid limited data reduce demand for the dollar as a defensive asset. This opens room for recovery in higher-beta currencies, including the pound.
The domestic backdrop in the UK is mixed: inflation in 2025 remains above the Bank of England’s target, which limits the pace of policy easing, but the BoE underscores the need for caution and consistency. This setup lowers the probability of rapid, deeper rate cuts, keeping the yield differential tilted in the pound’s favor versus the dollar for now—especially as the US currency eases.
Global market sentiment is gradually improving thanks to expectations of measured decisions by major central banks and a moderation in yield volatility. Against this backdrop, demand for the pound benefits, and current levels look attractive for a tactical recovery against the dollar, provided risk is controlled and forthcoming BoE communications and inflation prints are monitored.
Trading recommendation: BUY 1.3350, SL 1.3300, TP 1.3450
Origin: FreshForex
