GBP/USD Outlook Hinges on Break of Monthly Opening Range

British Pound Forecast: GBP/USD

GBP/USD approaches the monthly low (1.2834) as it gives back the rebound following the hawkish Bank of England (BoE) rate-cut, but the exchange rate may continue to track the positive slope in the 200-Day SMA (1.2818) should it hold within the opening range for November.

GBP/USD Outlook Hinges on Break of Monthly Opening Range

Keep in mind, GBP/USD has held above the long-term moving average since May, and the recent weakness in the exchange rate may end up short-lived as the BoE insists that ‘a gradual approach to removing policy restraint remains appropriate.’

In turn, GBP/USD may attempt to retrace the decline from the monthly high (1.3048) as the BoE appears to be unfazed by the 2024 Autumn Budget, but fresh data prints coming out of the UK may produce headwinds for the British Pound as the labor market report is anticipated to show a rise in the jobless rate.

UK Economic Calendar

The UK Unemployment Rate is seen widening to 4.1% in the three-months through September from 4.0% the month prior, while claims for jobless benefits are projected to increase 30.5K in October.

Signs of a weakening labor market may fuel the recent decline in GBP/USD as it puts pressure on the BoE to further support the economy, but a better-than-expected unemployment report may generate a bullish reaction in the British Pound as it raises the central bank’s scope to keep UK interest rates on hold at its last meeting for 2024.

With that said, GBP/USD may continue to track the positive slope in the 200-Day SMA (1.2818) as it holds above the moving average, but the exchange rate may extend the recent series of lower highs and lows should it fail to hold above the monthly low (1.2834).

GBP/USD Price Chart –Daily

Chart Prepared by David Song, Strategist; GBP/USD on TradingView

The opening range for November is in focus for GBP/USD as it initiates a series of lower highs and lows, and failure to defend the monthly low (1.2834) may push the exchange rate below the 200-Day SMA (1.2818) for the first time since May.
A break/close below 1.2820 (38.2% Fibonacci extension) may push GBP/USD towards the 1.2710 (23.6% Fibonacci extension) to 1.2760 (61.8% Fibonacci retracement) region, with the next area of interest coming in around the August low (1.2665).
At the same time, GBP/USD may face range bound conditions if it holds within the opening range for November but a breach above the monthly high (1.3048) may push GBP/UD back towards the 1.3140 (78.6% Fibonacci extension) to 1.3150 (23.6% Fibonacci extension) zone.

Additional Market Outlooks

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US Dollar Forecast: EUR/USD Opening Range in Focus Ahead of US CPI

USD/CAD Still Holds Below Monthly High Following Dovish Fed Rate Cut

--- Written by David Song, Senior Strategist

Follow on Twitter at @DavidJSong

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