British Pound Breaks Above 1.3400 as Oil Slump Overshadows Strong US PMI

• A softer Dollar lifts GBP/USD by 0.26% to 1.3423.
• Stronger US manufacturing activity fails to prevent WTI from dropping more than 5.60%.
• With NFP ahead, traders expect the BoE to lift rates to 4%.

October’s ISM Manufacturing PMI points to continued strength in the US economy, yet the Pound Sterling is up around 0.26% against the US Dollar on Monday. Sterling has begun the eleventh month of the year on a positive footing, with GBP/USD quoted at 1.3423 at the time of writing.

GBP/USD climbs ahead of BoE decision as falling Oil prices weigh on Dollar

Against a forecast of 54.6, the Institute for Supply Management (ISM) manufacturing reading rose to 55.5 from 54.5. Within the report, the employment measures eased by a tenth, while Prices Paid fell to 75.2 from 77.9.

Although the figures were supportive of the US Dollar, renewed optimism over a diplomatic resolution to the US-Iran conflict pushed energy prices lower. West Texas Intermediate (WTI), the US Oil benchmark, shed more than 5.60% to $96.32. Crude’s positive correlation with the Greenback consequently weighed on the currency. The US Dollar Index (DXY), which measures the American currency against six other currencies, slipped 0.27% to 101.68.

According to US Secretary of State Marco Rubio, US President Donald Trump favours a diplomatic resolution. The US mid-term elections would shape price action next, before attention turns to Friday’s Nonfarm Payrolls report.

Having absorbed the Autumn Budget, UK traders are turning their attention to the Bank of England (BoE) monetary policy decision.

According to Prime Terminal, money markets had factored in a total of 33 bps of rate increases. The BoE is widely expected to deliver a 25-basis-point rise, taking rates to 4% by the end of the year.

A narrowing interest rate differential between the US and the UK supports the Pound. However, GBP/USD’s gains could be limited if the BoE leaves rates unchanged in December while the Fed raises them in line with market pricing.

US releases take the spotlight on a quiet UK calendar

With no UK releases scheduled, traders will focus on US Factory Orders and the Job Openings and Labour Turnover Survey (JOLTS).

GBP/USD Price Forecast: Near-term bullish bias holds

Holding above the latest composite cluster of simple moving averages around 1.3376, GBP/USD retains a bullish near-term bias on the daily chart and trades at 1.3418. Former trend-line resistance levels also sit beneath the pair. The breached descending resistance line from 1.3653 now offers support near 1.3387, while the earlier resistance line linked to the 1.3869 peak underpins prices around 1.3244. Near 59, the Relative Strength Index (14) signals positive bullish momentum without suggesting it is overstretched. This supports the view that buyers remain in control, albeit with gains developing at a measured pace.

Initial downside support lies around the current price of 1.3418. Below that, the trend line now acting as a floor at 1.3387 precedes the simple moving average cluster near 1.3376, with further support at the earlier breakout zone around 1.3244. For GBP/USD, the next significant upside hurdle would be the breached rising support trend line near 1.3668. A firmer barrier lies at the higher upward trend-line break around 1.3842, where sellers could seek to regain control.

(The technical analysis of this story was written with the help of an AI tool. Know more.)