The pound extends its decline for the second consecutive day, challenging support as markets increasingly price in a December BoE rate cut.
Entry Zone: Sell rallies to 1.3160-1.3180 area
Stop Loss: Above 1.3220
Targets: 1.3053 first, then 1.2965 if downward momentum accelerates
Catalyst Watch: US government shutdown resolution vote, BoE speakers
Trading Rationale
The GBP/USD shows increasing bearish pressure:
- Price action continuing lower after failing to hold above 1.3200
- Major banks including Morgan Stanley, Citigroup, and UBS now expect a December BoE rate cut
- BoE policymaker Greene’s comments suggesting policy may not be “meaningfully restrictive”
- Technical breakdown below key short-term support
The fundamental backdrop has shifted notably bearish for sterling, with markets now pricing higher probability of a December BoE rate cut to 3.75%. This comes as inflation persistence concerns remain but are being outweighed by growth considerations.
Watch for potential acceleration lower if the 1.3100 psychological level breaks, opening the path toward 1.3053 support. The US House vote on government shutdown resolution could add volatility.
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