• GBP/USD rebounds from the 1.3200 mark as USD bulls pause for a breather following the recent rally.
• Geopolitical risks and elevated US bond yields back the case for the emergence of USD dip-buying.
• Traders now look to FOMC Minutes for cues about the policy path and some meaningful impetus.

The GBP/USD pair attracts some dip-buyers near the 1.3200 mark on Tuesday and hits a fresh daily high during the first half of the European session. Spot prices, however, remain confined in a familiar range held over the past two weeks or so and currently trade around the 1.3240 region, up less than 0.10% for the day.

The US Dollar (USD) edges lower as bulls opt to take some profits off the table following the recent strong rally to the highest level since April 2025, offering some support to the GBP/USD pair. Furthermore, traders have been pricing in tighter monetary policy from the Bank of England (BoE) amid sticky inflation due to elevated energy prices, which further underpins the British Pound (GBP) and contributes to the intraday move up.

The downside for the USD, however, seems cushioned amid persistent geopolitical uncertainties stemming from the ongoing conflicts in the Middle East. Moreover, traders are still pricing in over an 85% chance that the US Federal Reserve (Fed) will raise borrowing costs again by the year-end. This, along with elevated US bond yields, backs the case for the emergence of some USD dip-buying and should keep a lid on the GBP/USD pair.

Despite receding bets for an October Fed rate hike, a deepening fiscal shock in France led to an extended rout in the fixed income market and kept US bond yields close to multi-year highs. Traders might also refrain from placing aggressive directional bets and opt to wait for more cues about the Fed’s policy path. Hence, the focus will remain glued to FOMC Minutes, due on Wednesday, and speeches from influential FOMC members.

Meanwhile, the GBP/USD pair reacts little to the UK Constructive PMI, which improved from 44.3 to 46.1 in September. Traders now look to comments from external BoE MPC member Catherine Mann for some impetus. Nevertheless, the fundamental backdrop makes it prudent to wait for strong follow-through buying before confirming that spot prices have bottomed out near the 1.3180 region, or an over two-month low touched last week.

GBP/USD 4-hour chart

Technical Analysis

The recent range-bound price action might be categorized as a bearish consolidation phase against the backdrop of the decline from the August swing high. Moreover, the GBP/USD pair trades beneath the 100-period Simple Moving Average (SMA) dynamic barrier on the 4-hour chart, suggesting that recovery attempts remain vulnerable. The 100-period SMA at 1.3319 marks the key level bulls would need to overcome to ease downside pressure and open the way toward higher levels. On the downside, weakness below 1.3180 would reaffirm the negative bias and expose the GBP/USD pair to further slippage.