The GBP/USD pair rose to 1.3371 on Tuesday, though gains were tempered as market expectations for a Bank of England rate increase have been trimmed amid falling oil prices.
Brent crude slipped to around $100 a barrel after former President Donald Trump suggested the possibility of a diplomatic resolution with Iran. Increased regional supply further pressured prices downward, reducing immediate shortage concerns.
Bank of England policymakers indicated last week that inflation and rate trajectories will hinge largely on oil and gas price movements over the months ahead. Consequently, market pricing now assigns an about‑80% chance to a November rate hike and roughly a 56% chance of a further increase before year‑end.
Spotlight is also turning to the upcoming UK autumn Budget, where the government is reportedly weighing an expansion of the new property tax to residential properties valued above $1.5 million.
Meanwhile, the US dollar stays firm on expectations of additional Federal Reserve tightening, which continues to cap sterling’s upside momentum.
Technical Analysis
On the H4 timeframe, price surged to 1.3399 before correcting to 1.3358. The pair has now pierced the 1.3381 downward channel, setting the stage for a potential rise toward 1.3431, after which a pullback to around 1.3390 is anticipated.
A bullish breach is expected to target the local high of 1.3431.
The Stochastic oscillator reinforces the bullish outlook, as its signal line sits above 50 and points upward, hinting at a short‑term move toward the 80 level.
Conclusion
GBP/USD continues to trade in a mixed environment as reduced expectations for a Bank of England rate hike—driven by falling oil prices—keep the pair under pressure. The market still prices an about‑80% chance of a November increase and roughly a 56% chance of a further hike before year‑end, while the upcoming UK autumn Budget adds another layer of uncertainty. Meanwhile, expectations of additional Federal Reserve tightening bolster the US dollar, constraining sterling’s upside. Technically, a short‑term rise toward 1.3431 is forecast, followed by a pullback to around 1.3390 on the H4 chart once the advance completes.
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