British Pound: BoE pricing keeps rangebound against Euro – ING
ING’s Francesco Pesole notes EUR/GBP has held a tight 0.855–0.860 range since early September after a Bank of England (BoE) meeting that did not strongly challenge aggressive market tightening expectations.
The British Pound (GBP) remains relatively stable against the US Dollar (USD), with the GBP/USD pair trading around mid-1.3300s during the Asian session. This consolidation suggests that the pair may continue to move in a downward direction, as market sentiment leans towards bearish traders. The US Dollar has shown a bullish bias, supported by the Federal Reserve's (Fed) hawkish stance and the ongoing Middle East tensions.
In contrast, the Bank of England (BoE) has adopted a more cautious approach, with a gradual easing bias, which has contributed to the British Pound's underperformance relative to the USD.
The divergence in monetary policy between the Fed and the BoE has played a significant role in the GBP/USD pair's relative decline. The Fed's decision to raise interest rates for the first time in over three years has bolstered the USD's strength, while the BoE's cautious stance and gradual rate hikes have weakened the GBP. Geopolitical factors, such as Iran's warning that any military attack will trigger a response in a different geographical area and with different weapons, have further supported the USD's safe-haven appeal.
Despite recent easing in oil prices and a fall in US bond yields, the GBP/USD pair remains under pressure. Traders will closely monitor speeches from influential Federal Open Market Committee (FOMC) members and developments surrounding the Middle East crisis, as they may impact USD demand. Additionally, flash Purchasing Managers' Indexes (PMIs) from both the UK and the US, due on Wednesday, are expected to provide further impetus to the GBP/USD pair.
The pair's technical outlook remains bearish, with the 100-day Simple Moving Average (SMA) at 1.3435 and the 50.0% Fibonacci retracement level at 1.3407 acting as key support. Downside support is found at the 61.8% Fibonacci retracement level at 1.3344, followed by the 78.6% level at 1.3254 and the structural anchor near 1.3139.
Conversely, resistance is seen at the 50.0% retracement level at 1.3407, the 100-day SMA at 1.3435, and the 38.2% retracement level at 1.3471.
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