GBP/USD Price Forecast: Fresh Upside Hinges on a Decisive Break Above 1.3420

• At around 1.3373, GBP/USD trades flat after reversing its early advance as the US Dollar edges back up.
• Wednesday’s Fed decision is expected to bring no change in interest rates.
• Next week’s BoE meeting is expected to deliver tighter monetary policy.

At around 1.3373 against the US Dollar (USD), the British Pound (GBP) is little changed during Monday’s European session, having relinquished its earlier advance. A partial recovery in the US Dollar from its initial losses has left GBP/USD trading flat.

Near 101.70 at the time of writing, the US Dollar Index (DXY) remains slightly lower. The index measures the Greenback against a basket of six major currencies.

Wednesday’s monetary policy announcement from the Federal Reserve (Fed) will be a key focus for investors this week. According to the CME FedWatch tool, interest rates are almost certain to remain within the 3.75%-4.00% range. The same tool also indicates that the United States (US) central bank will increase rates at its December meeting.

Thursday brings further points of interest beyond the Fed decision: the preliminary Q3 Gross Domestic Product (GDP) release and September’s Personal Consumption Expenditure (PCE) Price Index. Expectations are for annualised US economic growth of 3.2%, up from the previous reading of 2.2%.

For sterling, attention centres on next week’s monetary policy announcement from the Bank of England (BoE). A 25 basis points (bps) increase in interest rates to 4% is widely anticipated.

GBP/USD Holds Above Its 20-Day EMA

Trading at 1.3370 on the daily chart, GBP/USD remains above its 20-day exponential moving average (EMA) of 1.3323. With buyers defending the recent recovery, this positioning points to a mildly positive near-term outlook. Meanwhile, a Relative Strength Index (RSI) reading of 54.8 places momentum in neutral-to-positive territory: it continues to lend support without signalling overbought conditions.

The 20-day EMA near 1.3323 provides the first downside support. A breach would probably weaken the bullish bias and leave the pair vulnerable to deeper declines. On the upside, the previous week’s high near 1.3420 is the first barrier. A clear move above it would create scope for further gains towards 1.3500.

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