POUND STERLING ANALYSIS & TALKING POINTS

• Don’t be fooled by UK GDP beat!
• Low growth environment weighs negatively on pound.
• GBP/USD bears eye bear flag breakout.

GBPUSD FUNDAMENTAL BACKDROP

Bank of England (BoE) interest rate expectations (refer to table below) stay in favor of a rate pause in the December meeting but should markets witness subsequent weak economic data, we may see a stronger dovish bias despite pushback from the BoE’s Governor Andrew Bailey.

BOE INTEREST RATE PROBABILITIES

Source: Refinitiv

TECHNICAL ANALYSIS

GBP/USD DAILY CHART

Chart prepared by Warren Venketas, IG

GBP/USD price action extends its recent downtrend post-GDP and now looks to test the 1.2200 psychological handle once more. The bear flag (black) pattern is still under consideration but will need to see additional downside towards flag support.

Key resistance levels:

• 200-day MA (blue)
• Flag resistance
• 1.2308
• 50-day MA (yellow)

Key support levels:

• 1.2200
• 1.2100/Flag support
• 1.2000
• 1.1804

MIXED IG CLIENT SENTIMENT (GBP/USD)

IG Client Sentiment Data (IGCS) shows retail traders are currently net LONG on GBP/USD with 70% of traders holding long positions (as of this writing).

https://www.dailyfx.com/news/forex-gbp-breaking-news-0-growth-for-uk-in-q3-wv-20231110.html