Market Overview
The GBP/USD pair has extended its downward move, hitting its lowest level since August 1, as traders brace for renewed trade tensions between the United States and China. The pair dropped to 1.3263, a multi-month low, retreating sharply from the September high of 1.3730.
The market remains dominated by risk aversion, as a prolonged U.S. government shutdown and heightened tariff threats weigh on sentiment. Former President Donald Trump’s announcement of a 130% tariff on Chinese goods starting November has further fuelled global uncertainty, pushing investors toward the U.S. dollar as a safe haven.
U.S. Dollar Strengthens Amid Rising Risks
The U.S. dollar continues to benefit from global risk-off sentiment and political gridlock in Washington. The U.S. government shutdown, now in its third year, stems from an impasse between Democrats and Republicans over healthcare and budget provisions.
In addition, escalating U.S.-China trade tensions have intensified market jitters. China’s restriction on rare earth exports critical components in technology manufacturing—has added another layer of pressure. Traders are also closely monitoring upcoming comments from Federal Reserve officials, which may provide clarity on the direction of future policy moves.
UK Data in Focus
Attention now shifts to key UK economic releases this week, which will likely dictate short-term price direction:
-
Tuesday: The Office for National Statistics (ONS) will publish the latest employment data, with forecasts suggesting the unemployment rate will remain at 4.7%.
-
Friday: The UK will release GDP, industrial production, and manufacturing output figures—offering insight into the health of the British economy and potential implications for the Bank of England’s next policy decision.
Weak results could strengthen the bearish case for GBP/USD, as markets reassess expectations of any near-term BoE tightening.
Technical Analysis
The daily chart confirms the bearish momentum for GBP/USD:
-
The pair has dropped below the 23.6% Fibonacci retracement level of the August–September rally.
-
It is trading below the 50-day Exponential Moving Average (EMA), a clear bearish signal.
-
The price is hovering near a key Murrey Math pivot zone at 1.3300, which acts as both a psychological and technical support point.
If bearish momentum persists, the pair could test support at 1.3185 in the near term. However, a break above 1.3400 would invalidate the bearish outlook and potentially trigger a short-term correction higher.
Support Levels: 1.3300 / 1.3260 / 1.3185
Resistance Levels: 1.3400 / 1.3425 / 1.3730
Trading Plan
Bearish Scenario
-
Entry: Sell GBP/USD below 1.3300
-
Take Profit: 1.3185
-
Stop Loss: 1.3425
-
Timeframe: 1–2 days
Bullish Scenario (Alternative View)
-
Entry: Buy GBP/USD above 1.3400
-
Take Profit: 1.3425
-
Stop Loss: 1.3185
Bias: Bearish
Time Horizon: Short-Term (1–2 days)
The bearish momentum remains dominant, with risks tied to U.S. trade policy headlines and UK macroeconomic data. Caution is advised as volatility could rise toward the end of the week.
