- GBP/USD advances for the second straight day as the USD retreats further from an 18-month high.
- A hawkish Fed and geopolitical risks could limit deeper USD losses ahead of the key US CPI report.
- Bulls await a trading range breakout before placing fresh bets and positioning for any further gains.
The GBP/USD pair attracts some follow-through buying for the second straight day, advancing to a one-week high during the Asian session on Wednesday amid the ongoing US Dollar (USD) corrective slide. Spot prices currently trade around the 1.3275 region, up 0.15% for the day, as the focus remains glued to the release of the latest US consumer inflation figures, due later today.
Apart from this, the US Producer Price Index (PPI) on Thursday and Federal Reserve (Fed) Chair Kevin Warsh’s speech at the annual meetings of the IMF and World Bank in Bangkok on Friday will be looked upon for more cues about the future policy path. The outlook, in turn, will play a key role in influencing the near-term USD price dynamics and provide some meaningful impetus to the GBP/USD pair.
In the meantime, the recent pullback in US bond yields from multi-year highs drags the USD Index (DXY), which tracks the Greenback against a basket of currencies, away from its highest level since April 2025. However, bets for another Fed rate hike in December, along with geopolitical uncertainties, could limit losses for the safe-haven buck and cap any further appreciating move for the GBP/USD pair.
From a technical perspective, a move above the 100-period Exponential Moving Average (EMA) on the 4-hour chart backs the case for a further intraday move up. Moreover, the Moving Average Convergence Divergence (MACD) has turned positive with the line above zero and the histogram expanding, which reinforces the constructive tone as long as the GBP/USD pair stays above the EMA support.
Meanwhile, the Relative Strength Index (RSI) at 64.78 flirts with overbought territory, hinting at strong but potentially stretched upside momentum. Hence, any further move up is likely to face initial resistance near the 23.6% Fibonacci retracement level at 1.3298, with subsequent hurdles at the 38.2% level near 1.3371 and the 50.0% retracement at 1.3429, marking a progressive barrier zone for further gains.
On the downside, the structural Fibonacci anchor around 1.3181, where buyers could look to reassert the broader recovery, could provide immediate support to the GBP/USD pair. A convincing break below, however, will be seen as a fresh trigger for bearish traders and set the stage for an extension of the downfall from the August monthly swing high near 1.3675.
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