British Pound bears retain control near July lows amid Fed-BoE divergence

GBP/USD retains a negative bias for the fourth straight day amid a bullish US Dollar.
Rising Fed rate hike bets keep US bond yields elevated and underpin the Greenback.
The BoE’s cautious stance favors bears as focus shifts to the key Trump-Xi summit.

The GBP/USD pair sticks to a mildly negative bias for the fourth straight day, trading around the 1.3230-1.3225 region during the Asian session on Thursday, near its lowest level since early July, touched the previous day. The fundamental backdrop suggests that the path of least resistance for spot prices remains to the downside, though bears seem hesitant ahead of a crucial meeting between US President Donald Trump and his Chinese counterpart Xi Jinping.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Meanwhile, the US Dollar (USD) preserves the previous day's strong gains to a nearly two-week high amid firming expectations for another interest rate hike by the Federal Reserve (Fed). The bets were lifted by the latest S&P Global report, which showed that US business activity accelerated for a fourth straight month in September and registered the fastest pace of growth since July 2021. This, in turn, keeps the yield on the benchmark 10-year US Treasury close to its highest level since 2007 and continues to act as a tailwind for the Greenback, which, in turn, is seen as a key factor weighing on the GBP/USD pair.

The British Pound (GBP), on the other hand, continues its struggle to attract any meaningful buyers on the back of the Bank of England's (BoE) more cautious holding or gradual easing bias amid stagflation fears. Adding to this, the mixed UK business activity report, published on Wednesday, keeps GBP bulls on the sidelines and contributes to the weaker tone surrounding the GBP/USD pair. Furthermore, the divergent Fed-BoE outlook validates the near-term negative outlook for the currency pair and backs the case for an extension of the recent well-established downtrend witnessed over the past month or so.

GBP/USD daily chart

Technical Analysis

The GBP/USD pair retains a bearish tone below the 100-day Simple Moving Average (SMA) and extends the slide below the 78.6% Fibonacci retracement level. The only nearby structural floor comes at the recent swing at 1.3139, which acts as key support for the bearish move.

On the topside, initial resistance is located at the 78.6% Fibo. at 1.3254, followed by the 61.8% level at 1.3344. Higher up, the 50.0% retracement at 1.3408 and the 100-day SMA at 1.3428 form a dense barrier ahead of the 38.2% level at 1.3471 and the 23.6% Fibo. at 1.3549.

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

US Dollar Price This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the British Pound.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.91%	1.16%	0.68%	0.82%	1.11%	0.73%	0.28%
EUR	-0.91%		0.27%	-0.20%	-0.05%	0.19%	-0.18%	-0.62%
GBP	-1.16%	-0.27%		-0.56%	-0.36%	-0.08%	-0.45%	-0.89%
JPY	-0.68%	0.20%	0.56%		0.17%	0.42%	0.06%	-0.38%
CAD	-0.82%	0.05%	0.36%	-0.17%		0.36%	-0.10%	-0.52%
AUD	-1.11%	-0.19%	0.08%	-0.42%	-0.36%		-0.37%	-0.88%
NZD	-0.73%	0.18%	0.45%	-0.06%	0.10%	0.37%		-0.44%
CHF	-0.28%	0.62%	0.89%	0.38%	0.52%	0.88%	0.44%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

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