The pound traded with noticeably more confidence than the euro yesterday. It was pressured in the first half of the day but did not collapse — it defended the major support at 1.3330, where buyers showed up in time. The CBI retail-sales report helped: this survey subtracts the share of firms reporting falling sales from those reporting rising sales. The market expected -47 after -55, but the result was -10. The improvement was sharp, and sterling held on that news.

This morning retail prices also surprised to the upside. The BRC retail-price index for October came in at 2.1% versus a 1.6% forecast and 1.4% previously. It shows how in-store prices changed, i.e., how inflation hits consumers' wallets. For the Bank of England, this is another argument for a rate hike on November 5, a move the market has discussed since Megan Greene's call. Sterling barely reacted to the print because the market has already priced in that scenario. Add Friday's PMIs — the composite rose to 53.1 from 52.0 — and the UK economy looks reasonably robust.

Attention remains on the October 28 Federal Reserve meeting. The probability of a rate hike is below 10% — the market expects a pause — but the Fed's tone could still be hawkish given persistent U.S. inflation. With no fresh drivers, I think the dollar will keep the edge, but the pound remains resilient, and GBP/USD will defend support better than EUR/USD.

No other UK releases are due today, so the focus shifts to the U.S., which will publish four reports. First: durable-goods orders for September — capital goods and long-lived equipment — forecast +0.6% after -0.1%; this gauges business capex appetite. Second: the Case-Shiller 20-city house-price index for August, forecast 2.6% after 2.5%. Third: the Conference Board consumer-confidence index, forecast 80.5 versus 81.9, shows how confident Americans feel about incomes and jobs; fourth: new-home sales, forecast 649k after 684k, indicate how high rates are affecting the housing market. No big surprises are expected, but weak consumer sentiment could cool the dollar a bit and help the pound.

My view: until the Fed decision, GBP/USD will mainly follow dollar sentiment, while UK inflation and domestic factors remain secondary.

Momentum

The price is now at 1.3331 — almost touching the lower breakout level at 1.3330. If the pair falls below and holds, the path opens to 1.3299 and then 1.3267. But this is the exact support where buyers showed up yesterday, so I do not count the first touch as a confirmed breakout and will wait for confirmation. The downside scenario is my primary view because the dollar currently has the edge, but the pound's resilience calls for caution. Upside resistance is 1.3361. A break above it would push the pair to 1.3390 and 1.3416. Such a move would need a catalyst, for example, weak U.S. consumer-sentiment data. Without that, I am skeptical of a rally—it's over 30 pips to the upper level.

Mean Reversion

The upside reversion level at 1.3346 sits 15 pips below the breakout point at 1.3361, so there's little confusion between scenarios. Overnight, the pair tested the 1.3346–1.3348 area several times and retreated, so I'd look to sell if price moves above, fails to hold, and returns below. I place the stop above the highest point of the failed attempt.

The downside reversion level at 1.3325 sits five pips below the breakout level at 1.3330, so beginners should be extra careful here. The buy setup: price dips below 1.3330 to around 1.3325, fails to extend lower and quickly returns above 1.3330 — then I consider long positions with a stop under the low of the failed try. But if price crosses 1.3325 and holds below it, that's a confirmed downside breakout and buying is off the table. Since the pair sits right on this support, it's best to skip the initial reaction and wait for clarity. Yesterday's bounce from 1.3330 supports the reversion scenario, but weak dollar sentiment would need to confirm it.