GBP/USD Advances as Greene Keeps Rate Hike Possibility Alive

Summary:

GBP/USD rebounds toward 1.3235 as hawkish BoE comments and a softer Dollar support Sterling. However, expectations of weaker UK GDP could limit further gains.

Buy GBPUSD

End Time

CLOSED

1.32400

ENTRY

1.34800

TGT

1.31600

1.34008 +0.00021 +0.02%

239

Points

Profit

1.31600

1.32639

CLOSING

1.32400

ENTRY

1.34800

TGT

The British Pound regained some ground against the US Dollar on Tuesday, with GBP/USD advancing 0.2% to approximately 1.3233 as hawkish remarks from Bank of England (BoE) policymaker Megan Greene strengthened expectations that UK interest rates could remain elevated for longer.

Greene warned that policymakers must respond early to inflationary pressures stemming from energy supply disruptions, emphasizing the risks of allowing higher costs to spread into wages and broader consumer prices. Her comments suggested that delaying monetary action could make inflation considerably harder to contain.

The policymaker also indicated that Britain's current monetary conditions may not be sufficiently restrictive, leaving room for additional tightening should inflation remain persistent. Her relatively hawkish assessment offered support to Sterling, particularly as the BoE has maintained its benchmark interest rate at 3.75% throughout the year.

Meanwhile, a modest retreat in the US Dollar provided another boost to GBP/USD. The US Dollar Index (DXY) eased toward 102.30 after reaching a fresh yearly high of 102.60 on Monday, allowing the Pound to recover some of its recent losses.

Attention now turns to Thursday's UK economic releases, particularly August's monthly Gross Domestic Product (GDP) figures. Economists anticipate a 0.1% contraction following July's 0.4% expansion, raising concerns about the resilience of British economic activity.

Sterling's near-term recovery is receiving support from the BoE's increasingly cautious stance on inflation and the Dollar's corrective pullback. However, expectations of weaker UK growth could restrict further gains, leaving GBP/USD vulnerable if upcoming economic figures disappoint.

Technical Analysis

GBP/USD is showing early signs of stabilization on the daily chart after an extended period of selling pressure pushed the pair toward the 1.3180 support region. Trading around 1.3241, Sterling has begun consolidating above a historically significant demand zone, suggesting that bearish momentum may be losing strength and that a corrective recovery could be developing.

The broader market structure remains bearish following the sharp rejection from the 1.3640–1.3660 resistance area. The subsequent decline produced a series of lower highs and lower lows, with sellers successfully forcing prices beneath the former support levels around 1.3480 and 1.3320. However, the recent inability to sustain a breakdown below 1.3175–1.3190 suggests that buyers are beginning to defend this region.

The latest price action reveals a developing base around the 1.3200 psychological threshold, with several daily candles displaying lower wicks near support. This repeated rejection of lower prices indicates growing buying interest, although a confirmed bullish reversal has yet to materialize.

A sustained recovery above 1.3240–1.3270 would provide an initial indication that buyers are regaining control, potentially opening the way toward 1.3310–1.3330. This area represents an important resistance barrier, having previously served as support before the September breakdown. A decisive move beyond it would strengthen the recovery outlook and expose the next significant upside objective around 1.3470–1.3490.

The chart's projected trajectory suggests that Sterling could experience a gradual recovery, interrupted by brief corrective pullbacks, before challenging the higher resistance region. Such a move would represent a meaningful rebound from recent lows, although reclaiming 1.3490 would be necessary to begin repairing the broader bearish market structure.

Conversely, failure to maintain support above 1.3175 would invalidate the developing recovery scenario and expose the pair to renewed selling pressure. A confirmed daily close beneath this level could trigger another bearish extension toward 1.3100 and potentially the 1.3000 psychological threshold.

GBP/USD appears positioned for a potential corrective bullish recovery, supported by repeated buying interest around 1.3180. While the longer-term downtrend has not yet been reversed, a sustained advance above 1.3270 could encourage further gains toward 1.3320 and eventually 1.3480.

TRADE RECOMMENDATION

BUY GBP/USD

ENTRY PRICE: 1.3240

STOP LOSS: 1.3160

TAKE PROFIT: 1.3480

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Warren Takunda

Analysts

Warren Takunda, a seasoned finance leader specializing in the Middle East, is a trusted senior analyst with a proven track record. As head of the finance team, he excels in financial planning, analysis, and reporting. Warren's expertise in financial modeling and investment analysis delivers valuable insights to clients.

Rank

Articless

3150

Win Rate

63.78%

P/L Ratio

0.73

Focus on

XAUUSD, EURUSD, GBPUSD

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