GBP/USD price forecast: Four-month low near 1.3140 looks set for a retest

• Near 1.3222, GBP/USD remains under pressure as the US Dollar leads gains.
• Rising US core inflation underpins the US Dollar’s strength.
• Next week’s major UK economic releases are in focus for investors.

A four-week low of 1.3222 remains within reach for the British Pound (GBP) against the US Dollar (USD) during Friday’s European session. Continued US Dollar outperformance is weighing on GBP/USD, leaving sterling looking vulnerable.

A new 19-month high of 103.28 is recorded by the US Dollar Index (DXY) during European trading. The index measures the Greenback against a basket of six major currencies.

Dollar gains gather pace as hawkish Fed comments accompany firm US inflation

The case for further Dollar gains is reinforced by RBC strategists’ observation that “U.S. core-inflation pressures are building, while the labour market remains historically tight,” while ING’s FX team notes that “the combination of hawkish Fedspeak and a US CPI beat earlier this week continues to pay dividends for the dollar.”

Released on Tuesday this week, the October US Consumer Price Index (CPI) report put the increase in core inflation at 0.3%, above estimates of 0.2%. The core measure strips out volatile food and energy items.

For sterling, attention in financial markets turns to next week’s United Kingdom (UK) labour market figures for the three months ending September and Consumer Price Index (CPI) figures for October.

Expectations for Bank of England (BoE) interest rates are likely to be materially influenced by both releases.

GBP/USD Technical Analysis Signals Continued Near-Term Weakness

Trading at 1.3234 on the daily chart, GBP/USD remains below its 20-day Exponential Moving Average (EMA) of 1.3338, leaving the near-term outlook bearish. A failure to regain this short-term trend gauge indicates that rebounds remain limited for now. Meanwhile, the Relative Strength Index (14), at around 40, points to weak but stabilising downward momentum rather than intense selling pressure.

To soften the prevailing bearish outlook and pave the way for a more constructive recovery, the pair would need a sustained break above immediate resistance at the 20-day EMA near 1.3338. The supplied indicators do not identify clear nearby support, so traders may turn to recent lows on the price chart for potential interim floors. With GBP/USD still below its short-term moving average, the wider technical outlook favours caution.

(The technical analysis of this story was written with the help of an AI tool. Know more.)