Today, at the beginning of the week, GBP/USD edged higher, partially recovering the significant losses incurred on Friday. However, spot prices are not showing strong bullish momentum and remain just below the 20-day SMA, highlighting the need for caution before concluding that the recent correction from the August high has ended.

The US dollar is pausing after its strong rally on Friday amid month-end rebalancing, thereby helping GBP/USD recover.

The British pound is receiving support from comments by UK Chancellor of the Exchequer John Healey, who noted that maintaining fiscal discipline is the government's top priority ahead of Prime Minister Andy Burnham's autumn Budget, scheduled for October 28.

Meanwhile, traders are adjusting their expectations for the next Bank of England interest rate hike, shifting them from late 2026 to 2027. In contrast, comments from Federal Reserve Chair Kevin Warsh last week supported expectations of a September rate hike. This, combined with the risk of rising tensions between the United States and Iran, should limit the dollar's losses and cap the upside in GBP/USD.

In the latest developments related to the Middle East crisis, US military forces struck two Iranian missile launchers on Larak Island. In response, Iran launched ballistic missiles from Tehran and other cities, including Lorestan and Shiraz, as well as anti-ship missiles from southern Iran toward the Strait of Hormuz. This is once again prompting traders to factor geopolitical risks into their assessments, which in turn is supporting demand for the US dollar.

This week, attention should be focused on key US macroeconomic data that will become available at the beginning of the new month, including Friday's employment data, known as the Nonfarm Payrolls (NFP) report. At the same time, fundamental factors favor a bullish scenario for the US dollar, so caution is warranted when holding bullish positions in GBP/USD.

From a technical perspective, the pair is fluctuating around the 20-day SMA, with support at 1.3522. A break below this level would accelerate the decline toward 1.3480. The 1.3570 level represents resistance. As long as the Relative Strength Index has not moved into negative territory, the bulls still have a chance to regain their positions.