Near 1.3410: GBP/USD Price Forecast as Pair Maintains Monthly High

• 1.3410 remains in focus as GBP/USD holds firm near its monthly high.
• The British Pound has gained support from hawkish BoE expectations.
• UK Retail Sales and flash UK-US PMI releases are next on investors’ radar.

GBP/USD holds firm around 1.3410, near its monthly high. The British Pound (GBP) is stronger against the US Dollar (USD) in Thursday’s European session. Fuelling the pair’s gains, September’s hot United Kingdom (UK) Consumer Price Index (CPI) figures have reinforced hawkish expectations for the Bank of England (BoE).

UK inflation overshoot reinforces focus on BoE tightening

Renewed upward pressure was evident in the latest UK inflation figures, according to analysts at Nomura. They point out that “both headline and services inflation” in September were “above consensus expectations.” Underlying price pressures also remain persistent on the BoE’s core gauge. As the analysts put it, “the BoE’s core measure service prices momentum has been sticky over the past few months.”

Price pressures earlier in the supply chain add to the concern. Nomura notes that “upstream prices also surprised on the upside.” The analysts describe wholesale goods price increases as “dominated by a rise in energy costs,” although “core prices rose at a more modest pace.” Their warning that “upstream service prices are signalling a further increase in consumer prices” highlights the risk of renewed cost pass-through to households.

These conditions have prompted Nomura to revise its BoE outlook. The bank explains that “a combination of sticky inflation, a resilient labour market, strong economic growth and persistently elevated energy prices has led us to change our view on the BoE.” Further tightening is now its expectation: “We now see rate hikes in November and February, which is still a more dovish outcome than markets are pricing.”

Friday’s releases will bring September UK Retail Sales and October’s preliminary UK-United States (US) S&P Global PMI figures into focus for investors.

1.3409 Resistance: GBP/USD Technical Analysis

GBP/USD is at 1.3404 on the daily chart. Holding above the 20-day Exponential Moving Average (EMA) at 1.3313 has restored a near-term bullish bias. The pair lies between the 38.2% and 50.0% Fibonacci retracements of the recent decline, with the latter providing an overhead barrier at 1.3409. At 58.6, the Relative Strength Index (RSI) is moving into positive territory. This points to improving upward momentum as the pair challenges that key retracement resistance.

The 50.0% Fibonacci retracement at 1.3409 provides the first upside hurdle. Beyond it lie the 61.8% retracement near 1.3472 and the 78.6% level around 1.3562, before the more distant recent swing high of 1.3677. Initial downside support comes from the 38.2% Fibonacci retracement at 1.3345, followed by the 23.6% level around 1.3267. A steeper retreat would bring the structural floor near 1.3140 into view.

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