GBP/USD Forecast on October 22, 2025

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On the hourly chart, the GBP/USD pair continued to decline on Tuesday, remaining below the 50.0% retracement level at 1.3387. On Wednesday morning, the pair rebounded from this level and began a new downward move following the release of the UK inflation report. Thus, a consolidation of quotes below the support level of 1.3354–1.3357 would indicate the potential for a continued decline toward the next retracement level of 23.6% at 1.3313. A rebound from the 1.3354–1.3357 level, however, could signal a reversal in favor of the pound and a resumption of the bullish trend.

The wave situation turned bullish almost in a single day. The last completed downward wave broke the previous low, but the most recent upward wave also broke the previous high. The news background in recent weeks has been negative for the U.S. dollar, yet bullish traders have not taken advantage of the opportunities to advance. Now they are beginning to spread their wings — though very slowly.

On Tuesday, there were no significant economic reports from either the UK or the U.S., just as on Monday. However, on Wednesday morning, the UK released its September inflation report, which came as quite a surprise. Traders had become accustomed to persistently rising inflation in Britain, but this time the figure showed no increase compared to the previous month — holding steady at 3.8% year-over-year. Core inflation even declined from 3.6% to 3.5%, contrary to forecasts of 3.7%. As a result, expectations grew that the Bank of England might deliver another round of monetary easing before the end of the year, triggering a sharp bearish reaction.

I do not believe the new wave of bearish momentum will last long, but at the same time, Friday's upcoming U.S. inflation report could help the bears if it exceeds market expectations. The U.S. dollar lacks strong fundamental reasons to rise, but continues to seize every opportunity for modest strengthening. Bulls, meanwhile, remain extremely passive.

On the 4-hour chart, the pair reversed in favor of the pound after forming a bullish divergence on the CCI indicator, climbing toward the 100.0% retracement level at 1.3435. A rebound from this level favored the U.S. currency, leading to a new decline toward 1.3339. A rebound from 1.3339 could signal a new upward move, while consolidation below it would point to a continuation of the fall. No emerging divergences are currently observed on any indicator.

Commitments of Traders (COT) Report:

The sentiment among Non-commercial traders became more bullish in the latest reporting week. The number of long positions held by speculators increased by 3,704, while short positions decreased by 912. The gap between long and short positions now stands at approximately 85,000 vs. 86,000. Bullish traders are once again tipping the scales in their favor.

In my view, the pound still faces some downside risk, but with each passing month, the U.S. dollar looks weaker. If earlier traders were worried about Donald Trump's protectionist policies without fully grasping their implications, they may now be concerned about the consequences — potential recession, constant imposition of new tariffs, and Trump's ongoing confrontation with the Federal Reserve, which could make the regulator "politically controlled" by the White House. Thus, the pound now appears far less risky than the U.S. currency.

News Calendar for the U.S. and the U.K.:

• United Kingdom – Consumer Price Index (06:00 UTC)

On October 22, the economic calendar includes only one key event — already released — which supported the bears. The remaining part of the day is not expected to bring any further market-moving news.

GBP/USD Forecast and Trading Tips:

I cannot recommend selling the pair today, as I believe the trend has shifted to bullish. Buying opportunities can be considered in case of a rebound from the 1.3354–1.3357 level with targets at 1.3419–1.3425 and 1.3460, or from the 1.3313 level.

The Fibonacci grids are drawn from 1.3526–1.3247 on the hourly chart and 1.3431–1.2104 on the 4-hour chart.

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