GBPUSD:
The focal point is the release of September inflation in the UK. The consensus points to an acceleration in the headline index, which could keep the Bank of England from easing policy anytime soon. In the short term, higher inflation supports gilt yields and demand for the pound, particularly against the dollar amid softening U.S. yield expectations.
London’s fiscal agenda is also on investors’ radar: budget parameters being prepared with an emphasis on spending discipline reduce the risk premium for the pound. The labor market shows signs of cooling, but not enough to force the BoE into aggressive rate cuts.
In the U.S., the Fed heads into its meeting with a high likelihood of a rate cut, which narrows the yield differential in the dollar’s favor. Against this backdrop, the fundamental balance tilts toward moderate GBP appreciation versus USD if UK inflation lands near or above expectations.
Trade recommendation: BUY 1.3375, SL 1.3345, TP 1.3435
Origin: FreshForex
