23.10.202604:55 Forex Analysis & Reviews: Overview of the GBP/USD Pair. October 23. The Pound Can't Get Enough of the Dollar's Retreat

The GBP/USD currency pair traded fairly calmly on Thursday, though it fell slightly in the afternoon. Over the past week and a half, the British pound has performed very well. The pound's rapid advance has not only improved its position versus the dollar but has also likely broken the bearish trend. Recall that on the daily and weekly TF, price traded off the lower boundaries of sideways channels and even formed deviations. Thus, technically, sterling should at least reach 1.3650.

The pound has real chances to keep rising. The Bank of England is likely to be the only major central bank of the "big three" to raise its key rate at the penultimate policy meeting of the year. This has been known for some time, but market confidence in that decision strengthened only this week. UK inflation rose more than expected, and the unemployment rate unexpectedly fell to 4.7% (down 0.2 percentage points). Thus, the labor market improved in August while inflation continues to rise, prompting the central bank to move from words to action.

What could help the dollar in the current situation? Frankly, only another "black swan." We have argued that the market could see a Democratic victory in Congress as a positive factor—at least for the U.S. currency. Recall that Trump favors a cheap dollar and low Federal Reserve rates, and U.S. policy under him tends to weaken the dollar unless the president starts a war. Therefore, a Democratic win could further boost the dollar.

If Donald Trump renews hostilities against Iran after the elections, that too could support the dollar. We do not expect a major dollar surge from that factor because the Middle East war is already priced in to some extent, but it could produce some growth.

We also believe the dollar's fate now depends more on the market itself than on the Fed or Trump. If the market wants to buy the dollar, it will find or invent reasons to do so. The pound's technical picture looks much more "technical," so we don't expect sterling to fall below the 1.3100–1.3150 area. The euro situation is more complex, and at some point the euro could drag its "younger brother" down. Summing up: there is still little chance of a strong dollar rally. On the daily TF, every dollar rise in 2026 occurred within a sideways channel—overall, the dollar's gain has been a modest long-term correction. All the "black swans" that arrived this year have not enabled the dollar to form a lasting uptrend.

The average volatility of the GBP/USD pair over the last 5 trading days is 72 pips. For the pound/dollar pair, this value is considered "average." On Friday, October 23, we therefore expect movement inside a range bounded by 1.3297 and 1.3441. The higher linear-regression channel is turning down again. The CCI entered the oversold area twice and formed a bullish divergence, warning of the end of the downtrend.

Nearest support levels:

S1 – 1.3367

S2 – 1.3306

S3 – 1.3245

Nearest resistance levels:

R1 – 1.3428

R2 – 1.3489

R3 – 1.3550

Trading recommendations:

The GBP/USD currency pair has begun an uptrend that could become the start of a long-term move. Trump's policies will continue to pressure the U.S. economy, so we do not expect long-term strength from the American currency. So far, 2026 has been positive for the dollar due to geopolitics and inflation, which forced capital to seek safety and the Fed to return to tightening monetary policy. However, on the weekly TF, price remains flat between 1.3150 and 1.3780 within a four-year uptrend, supporting expectations for sterling's medium-term rise. Consider long positions with targets of 1.3428 and 1.3441 while the price is above the moving average. If price is below the moving average, you can trade the downside, targeting 1.3245 and 1.3184.

Explanations for the illustrations:

• Linear regression channels help determine the current trend. If both are directed the same way, the trend is currently strong.
• The moving average line (settings 20,0, smoothed) defines the short-term tendency and the direction in which trading should be conducted now.
• Murray levels are target levels for moves and corrections.
• Volatility levels (red lines) show the likely price channel the pair will trade in over the next 24 hours, based on current volatility indicators.
• The CCI indicator — entering the oversold area (below -250) or the overbought area (above +250) — signals an imminent trend reversal in the opposite direction.