Key Events:
- BOE Gov Bailey’s Speech at the IMF Meetings (Tuesday & Thursday)
- UK and US Flash Manufacturing and Services PMIs (Thursday)
- Technical Analysis: GBPUSD
Following the notable drop in the UK year-on-year consumer price inflation to 1.7%, below both the 1.9% market expectations and the BOE’s 2% target, attention turns to upcoming data. Insights into the direction of UK monetary policy and the health of the economy will be closely watched in Thursday’s UK flash PMIs and Governor Bailey's speeches at the IMF meetings on Tuesday and Thursday.
The upcoming monetary policy decision for the British pound is coinciding with that of the Fed on Nov 7th, following the US elections and expected market volatility on Nov 5th. Markets appear to have already priced in a rate cut from the BOE, but further movements will likely be driven by Bailey’s statements this week. Meanwhile, the US Dollar Index and EURUSD are showing signs of momentum exhaustion, suggesting a possible reversal, which could support a bullish continuation for the pound.
Despite recent pressures, the GBPUSD remains above the 1.30 mark, supported by the 15-year consolidation pattern. Unless a confirmed close below the 1.30-1.29 zone occurs, the bullish outlook remains intact.
Technical Analysis
GBPUSD Forecast: Monthly Time Frame – Log Scale
Source: Tradingview
The pound is currently rebounding from the upper border of its 15-year consolidation and trendline that connects the lower highs between 2014 (1.7191) and 2021(1.4250).
Beyond the significance of the following alignment, a bearish engulfing pattern alongside an oversold relative strength index indicator as per the history of the monthly time frame suggest a bearish reversal, leaving the scenarios in the following manner:
Bullish Scenario
If the 1.30-1.29 support zone holds, the pound could break higher, back towards the 1.34 and 1.37 price zones.
Bearish Scenario
A close below 1.2930 would suggest a deeper decline, with potential support levels at 1.2570 and 1.22.
--- Written by Razan Hilal, CMT – on X: @Rh_waves
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