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13.10.2026 11:01 AM
GBP/USD – Price Analysis and Forecast: Fed Policy Expectations and Geopolitical Risks Limit Gains

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On Tuesday, GBP/USD attracted buyers following a decline, finding support near the 9-day exponential moving average (EMA). Spot prices remain within the familiar trading range that has held for approximately three weeks, warranting caution when opening positions in anticipation of a significant advance.

The British pound is strengthening following the release of the British Retail Consortium (BRC) like-for-like retail sales data, which exceeded analysts' expectations. Additional support comes from comments by Bank of England Monetary Policy Committee member Megan Greene, who expressed concern about potential second-round inflationary effects if the central bank fails to take the necessary action in the near term. A modest decline in the US dollar is also supporting GBP/USD, driven by profit-taking after the dollar reached an 18-month high on Monday.

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Nevertheless, the dollar's downward potential appears limited amid growing expectations that the Federal Reserve will raise interest rates again before the end of this year. Rising US Treasury yields are being supported by inflation risks associated with volatility in energy prices. Furthermore, a geopolitical risk premium persists due to the conflict between the United States and Iran, as well as escalating tensions in Yemen, where the Iran-backed Houthi movement is confronting a Saudi-led coalition. These factors could limit losses in the US dollar, which serves as a safe-haven asset, and constrain further gains in GBP/USD.

From a technical perspective, GBP/USD maintains a bearish bias on the daily chart in the near term, trading below key moving averages.

The 9-day EMA is the nearest resistance level, followed by the 14-day EMA and the 20-day simple moving average (SMA) at 1.3265. A break above this level would ease bearish pressure. Support is provided by the psychological 1.3200 level, followed by 1.3180. A break below these levels could accelerate the pair's decline toward the June low.

As long as the oscillators remain in negative territory, bears retain the advantage. Therefore, any corrective move higher is likely to be viewed as a selling opportunity.

Irina Yanina,
Analytical expert of InstaTrade
© 2007-2026

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