GBP/USD Overview – October 15: Unemployment Hits the British Pound

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The GBP/USD currency pair once again traded lower on Tuesday. This time, there were actual reasons for the pound's decline—at least during the first half of the day. The UK releases macroeconomic data infrequently, but Tuesday was one of those rare days. The unemployment rate came in above expectations, while jobless claims exceeded forecasts by 2.5 times. These two reports were enough to trigger a further drop in the pound. Naturally, the market continues to ignore equally poor fundamental and macroeconomic data for the U.S. dollar—but that has now become business as usual in recent weeks.

In the EUR/USD article, we suggested that the recent declines in both major currency pairs could be attributed to either market manipulation or simply range-bound movement (flat) on the daily chart—and either way, the outcome remains the same: a prolonged downturn for the U.S. dollar. No one knows when this will happen. Perhaps we'll continue to observe flat trading for months. However, considering the current fundamental background, it is difficult to argue in favor of dollar strength.

We want to remind readers that monetary policy from the Federal Reserve and the Bank of England remains a key driver for currency movement. Even if the Fed refrains from cutting its policy rate in 2025—which cannot be ruled out entirely—it will still end up lowering rates eventually. If not in 2025, then in 2026. Even if the Monetary Committee resists, the Fed will still ease policy. Even if inflation rises to 4–5%, the Fed is likely to continue with dovish measures. Trump will not let up pressure on the central bank. As of now, three out of twelve voting FOMC members support cutting rates at every meeting. Next year, this number is expected to rise to at least four. All Trump needs is a suitable pretext to replace another two members, and then the outcome is sealed.

Once that happens, rates could rapidly plunge. Trump is not concerned with how markets will react. He and his team are likely preparing in advance for market turmoil to capitalize on it. Meanwhile, BoE officials are already suggesting that no further policy easing may be necessary in 2025. The situation is straightforward, and we've been warning traders about it since the summer. UK inflation has risen to nearly 4%, almost twice the central bank's target, and it has been increasing steadily for a full year. This is no seasonal surge but a sustained trend that could continue into next year. As a result, the BoE currently has no reason to lower the key interest rate—unless, of course, the UK labor market collapses in a manner similar to the U.S.

The average volatility of GBP/USD over the past five trading days stands at 94 pips, which is considered "average" for the pair. On Wednesday, October 15, we expect the pair to move within a range bounded by 1.3205 and 1.3393. The higher linear regression channel is pointed upward, indicating a clear medium-term uptrend. The CCI indicator has re-entered the oversold zone for the third time, once again signaling the potential for a resumption of bullish movement.

Nearest support levels:

S1 – 1.3245

S2 – 1.3184

S3 – 1.3123

Nearest resistance levels:

R1 – 1.3306

R2 – 1.3367

R3 – 1.3428

Trading Recommendations:

The GBP/USD currency pair is currently undergoing a correction, but its long-term outlook remains unchanged. Donald Trump's policies will continue to pressure the dollar, so we do not anticipate sustained appreciation of the U.S. currency. Therefore, long positions targeting 1.3672 and 1.3733 remain more relevant if the price remains above the moving average. If the price falls below the moving average line, small short positions can be considered with targets at 1.3245 and 1.3205 based on technical factors.

From time to time, the dollar experiences brief corrections (as is happening now), but for a real and lasting bullish trend to form, it needs clear signs that the trade war is ending or other broad, positive developments.

Illustration Key:

• Linear regression channels help outline the current trend. If both channels point in the same direction, the trend is strong.
• The smoothed moving average (20.0) determines the short-term direction and recommended bias.
• Murray levels serve as reference points for movement targets and corrective phases.
• Volatility levels (red lines) estimate the projected daily price range based on current volatility metrics.
• The CCI indicator signals a potential reversal when entering oversold (below –250) or overbought (above +250) zones.

The material has been provided by InstaForex Company - www.instaforex.com