GBP/USD Holds 1.3230 at 4-Week Low as BoE Hike Bets Keep the 1.3460 Target in Sight

GBP/USD traded at 1.3230 on Friday, down 0.0006 or 0.05% on the session, inside a narrow day range of 1.3218 to 1.3251. The pair opened near 1.3234 in Asian trading, tested its 1.3220 to 1.3243 pivot zone through the European morning and slipped to a session low of 1.3218 before steadying. The 1.3230 print marks a four-week low for sterling against the dollar, the weakest level since October.

The week has been one-directional. GBP/USD closed Monday, November 9, at 1.3441 after a 0.66% gain and reached 1.3458 early Tuesday. It then fell 0.69% to 1.3348 on Tuesday, 0.54% to 1.3276 on Wednesday and 0.34% to 1.3231 on Thursday. From Tuesday’s high to Friday’s low, the pair dropped 240 pips. Against the prior Friday’s close of 1.3352, sterling is down 0.91% for the week.

The longer view shows a currency holding up better than its peers. Over the past month, the pound has gained 0.28% against the dollar, and over 12 months it is up 0.44%, compared with a 4.83% annual decline in EUR/USD. The 52-week range runs from 1.3077, set on November 19, 2025, to 1.3795 on January 29, 2026. At 1.3230, the pair sits 4.1% below its January high and 1.2% above its 52-week low.

The driver this week is the dollar. The U.S. Dollar Index touched 103.30 on Friday, its highest level in 19 months, after hot U.S. inflation data and hawkish Federal Reserve commentary pushed traders to price a December hike as fully certain. EUR/USD dropped to a 19-month low of 1.1043, and the yen weakened to 160.10 per dollar.

Sterling’s relative resilience shows in the crosses. EUR/GBP traded at 0.8361 on Friday, up 0.09%, which shows the pound slipping slightly against the euro on the day. Over the year, however, EUR/GBP is down 5.22%, a sign that sterling has strongly outperformed the euro across 2026.

The setup heading into the weekend is a contest between two hawkish central banks. The Bank of England raised Bank Rate to 4% on November 4, its first hike since 2023, and the UK economy grew 0.7% in the third quarter. The Federal Reserve is priced for a December hike with growing odds of a half-point move. Sterling has a rate story of its own, but this week the market decided the Fed’s story is louder.

How the Week Broke: From 1.3458 to 1.3218

The week opened with sterling on the front foot. GBP/USD rose 0.66% on Monday to close at 1.3441 as the dollar slipped to a one-month low and Treasury yields fell on expectations that a divided Congress, decided in the November 3 U.S. midterm elections, would slow federal spending. The pair touched 1.3458 in early Tuesday trading, its highest level since the first week of November.

Tuesday’s U.S. inflation data flipped the trade. The October Consumer Price Index rose 0.4% against a 0.3% forecast, and core CPI rose 0.3% for a third straight month. The 2-year Treasury yield jumped 17 basis points to 4.74%, its biggest one-day move since April 2025. GBP/USD fell 0.69% to close at 1.3348.

Wednesday brought the Fed’s response. Fed Governor Christopher Waller, speaking at the Bank of England Watchers Conference at King’s Business School in London, said a 50-basis-point hike should be considered in December if core CPI ran at 0.3%. The dollar index climbed 0.6% to 102.2. Sterling fell 0.54% to 1.3276, trading as low as 1.3267.

Thursday brought mixed news for the pound. UK GDP grew 0.7% in the third quarter, an acceleration from 0.5% in the second quarter, but the figure only matched expectations and gave sterling little fresh support. On the same day, President Trump said the U.S. does not need a deal with Iran, sending oil higher and pushing the 10-year Treasury yield up 11.6 basis points to 5.105%. The dollar index broke above its 102.83 pivot to a 19-month high above 103. GBP/USD broke below 1.3279 and fell 0.34% to 1.3231, with an intraday low of 1.3222.

Friday’s data offered no reprieve. October U.S. PPI rose 0.3% against a 0.4% forecast, but the annual rate reached 6.5%, the highest since November 2022. The dollar index held near 103.24. GBP/USD slid into its 1.3220 to 1.3243 pivot zone and touched 1.3218 before steadying at 1.3230.

The sequence shows that sterling’s moves this week were driven almost entirely by U.S. data and Fed commentary. The UK’s own news, a solid GDP print and a central bank that had just hiked, was not enough to offset the dollar’s rally. Each step lower came on a U.S. catalyst.

The Bank of England Hikes to 4%: The First Increase Since 2023

The Bank of England has joined the Fed in tightening, and that gives sterling a rate floor the euro lacks.

At its meeting ending November 4, the Monetary Policy Committee voted 8 to 1 to raise Bank Rate by 0.25 percentage points to 4%. Catherine Mann voted for a larger increase of 0.5 percentage points, to 4.25%. The eight members in the majority, including Governor Andrew Bailey, said the duration and scale of the energy price increase had generated sufficient inflationary pressures in the pipeline to warrant an increase. The hike was the first since 2023 and followed a hold at 3.75% in September.

The inflation backdrop explains the move. UK CPI inflation increased to 3.5% in September from 3.1% in August, and the Bank now expects it to rise to around 5% by the middle of next year. Core inflation rose to 2.8% and services inflation to 3.7%. Petrol prices jumped 29.8% year over year. The MPC said it is setting policy to make sure the effects of higher energy prices do not become embedded in inflation.

The forward guidance leans hawkish. The median response to the Bank’s November Market Participants Survey expected Bank Rate to rise to 4.25% in February. Markets now price another BoE hike before year-end and a further increase by March. The October CPI report, due November 18, will shape the odds of a December move.

The rate comparison with the U.S. is closer than many investors assume. The UK 2-year gilt yield stands at 4.98%, above the U.S. 2-year Treasury yield of 4.867%. That gap of 11 basis points in sterling’s favor reflects markets pricing a more aggressive BoE path at the short end. The 10-year gilt yield at 5.32% sits 16 basis points above the 10-year Treasury yield of 5.16%.

That rate advantage is the main reason sterling has outperformed the euro this year. The ECB’s deposit rate sits at 2.50%, far below Bank Rate at 4%. Investors seeking yield in Europe have favored sterling assets over euro assets, and EUR/GBP’s 5.22% annual decline reflects that preference.

The problem for GBP/USD is that the Fed’s path is repricing faster than the BoE’s. When U.S. 2-year yields jump 17 basis points in a day and gilt yields move less, the dollar gains even if the BoE remains hawkish in absolute terms. This week, U.S. rate expectations moved more than UK expectations, and the pair fell.

For the forecast, the BoE provides a floor under sterling. A central bank that has just hiked, with a dissenter voting for more and inflation heading toward 5%, will not allow the pound to weaken sharply without a policy response. That floor is why GBP/USD has held 1.3218 while EUR/USD broke to a 19-month low.

UK GDP Grows 0.7%: AI and Services Drive the Strongest Quarter in Two Years

The UK economy delivered a solid third quarter, and the composition of that growth matters for the rate outlook.

UK real GDP grew 0.7% in the third quarter of 2026, up from 0.5% in the second quarter and 1.9% higher than a year earlier, according to the Office for National Statistics’ first estimate published November 12. The figure was far stronger than the Bank of England’s July projection, which had expected growth of 0.3% and 0.1% in the second and third quarters respectively. Revisions in the 2026 Blue Book also raised the level of GDP by 0.5% in the second quarter.

Services drove the quarter. Services output rose 0.9%, production edged up 0.1%, and construction fell 0.7%. Within services, computer programming, consultancy and related activities grew 4.4% in the quarter and have been the biggest driver of UK growth in 2026, which the ONS links to AI and cloud computing activity. The Bank of England estimates that a fifth of recent growth has come from AI-related investment.

The spending side was balanced. Household consumption and government consumption both rose 0.6% on the quarter. Import volumes grew slightly faster than exports, and the ONS put the trade deficit at 1.3% of nominal GDP.

The ONS pointed to services as the main driver and to evidence that AI-linked businesses lifted the sector.

The market impact was muted because the number matched forecasts. The 0.7% print had been expected, so it gave sterling little fresh support against a stronger dollar. Strong growth would normally lift a currency, but the dollar’s widening rate advantage outweighed it this week.

The implication for the BoE is hawkish. Strong growth gives the MPC room to keep tightening without fear of tipping the economy into recession. GDP growth has surprised to the upside and aggregate credit volumes remain stronger than expected, according to the MPC’s November minutes. Economists say the stronger figures make another Bank of England rate rise in December more likely.

The comparison with the euro area is stark. Eurozone GDP grew 0.4% in the third quarter, with France contracting 0.1% and Italy flat. The UK’s 0.7% growth outpaced every major euro area economy except Ireland and Spain. That growth differential, combined with a higher policy rate, explains sterling’s outperformance against the euro.

For the forecast, UK growth supports the BoE’s hiking path and gives sterling a fundamental advantage over the euro. Against the dollar, it is necessary but not sufficient. The U.S. economy is also growing, and the Fed is also hiking. Sterling needs either a BoE that moves faster than expected or a Fed that slows down.

Gilt Yields at 5.32%: From Fiscal Fear to Rate Support

The gilt market has shifted from a source of risk for sterling to a source of support over the past month.

The UK 10-year gilt yield stood at 5.3188% on November 13, up 3.7 basis points on the day and 74 basis points higher than a year earlier. The 30-year gilt yield traded at 5.75% and the 2-year at 4.98%. Ten-year yields had fallen to 5.101% on November 5, their lowest since August 28, as oil prices dropped ahead of the Bank’s decision, before climbing back as U.S. yields rose.

October was the stress test. The 10-year gilt yield touched 5.53% on October 8, its highest since July 2007. The 30-year gilt yield reached 6.036% on October 7, its highest since January 1998. Those moves came as rising inflation and public borrowing raised doubts over the government’s fiscal position, and sterling weakened alongside the gilt selloff.

The October 28 Autumn Budget calmed the market. Chancellor John Healey’s first budget reaffirmed fiscal discipline and outlined a debt-sale plan in line with forecasts. The 10-year gilt yield eased 2 basis points to 5.33% on the day, as markets welcomed a cautious budget. The budget measures are expected to slightly reduce near-term inflation, lowering CPI by a quarter of a percentage point at their trough, while public sector net borrowing is expected to be a little higher.

That shift changed the relationship between gilts and sterling. In September and early October, yields rose while GBP/USD fell, as investors priced fiscal risk. Since the budget, higher gilt yields have reflected rate expectations rather than fiscal fear, and that kind of yield rise supports the currency.

The spread to Treasuries now favors sterling at both ends of the curve. The 10-year gilt at 5.32% yields 16 basis points more than the 10-year Treasury at 5.16%. The 2-year gilt at 4.98% yields 11 basis points more than the 2-year Treasury at 4.867%. Investors earn more holding UK government debt than U.S. government debt, a configuration that typically supports sterling.

The household impact is severe. Average 5-year fixed mortgage rates reached 6.00% in October, and 2-year fixed rates stood at 5.97%.

The next fiscal test arrives November 20, when the ONS publishes public sector finances for October. A borrowing overshoot would revive fiscal concerns and pressure both gilts and sterling. A figure in line with forecasts would reinforce the post-budget calm.

For the forecast, gilts are now a support for sterling rather than a threat. As long as yields rise on rate expectations and the fiscal story stays calm, a higher gilt yield helps the pound. A return toward 5.53% on the 10-year driven by fiscal fear rather than rate hikes would reverse that relationship and push GBP/USD lower.

UK Inflation Heading to 5%: The BoE’s Case for More Hikes

Inflation is the variable that will decide how far the Bank of England goes, and the trajectory points higher.

UK CPI inflation rose to 3.5% in September from 3.1% in August. The Bank of England expects it to rise to around 5% by the middle of next year, mostly because of the direct effects of higher global energy prices on fuel and household utility prices. Inflation is then projected to fall as the impact of energy prices on 12-month rates fades and restrictive monetary policy bears down on demand.

The September breakdown showed the pressure spreading. Core inflation rose to 2.8% and services inflation to 3.7%. Petrol prices jumped 29.8% year over year. Energy is the main driver, but core and services inflation rising alongside it is what concerns the MPC. The Committee’s stated goal is to prevent the energy shock from becoming embedded in wages and prices more broadly.

Energy remains the swing factor. Brent crude traded at $96.99 per barrel on Friday, up 1.22%, after attacks on Saudi energy infrastructure revived supply concerns. Brent stood at $113.43 at the end of October, at the height of the U.S.-Iran conflict. The International Energy Agency now projects a 1.7 million barrel per day global surplus in the fourth quarter, which points to lower oil prices over time. A sustained decline in oil would ease UK inflation and reduce the pressure on the BoE to keep hiking.

The October CPI report on November 18 is the next major catalyst for sterling. A hot print would raise the odds of a December hike and support the pound. A softer print would reduce those odds and leave sterling more exposed to the dollar.

The comparison with the U.S. shows why the rate race is close. U.S. CPI rose 0.4% in October with core up 0.3% for a third month, and U.S. PPI is running at 6.5% year over year. Both economies face energy-driven inflation, and both central banks are tightening. The difference is pace: the Fed is debating a half-point move, while the BoE’s next step is expected to be a quarter point.

Inflation also hits UK households harder than U.S. households in one key respect. The UK is a net energy importer, so higher oil and gas prices transfer income out of the country. The U.S. is a net energy exporter and benefits from higher energy revenue. That terms-of-trade difference means the same oil shock hurts UK growth more than U.S. growth, which limits how far the BoE can tighten without damaging the economy.

For the forecast, UK inflation heading toward 5% keeps the BoE hawkish and provides a floor under sterling. The question is whether the BoE’s tightening will keep pace with the Fed’s. If UK inflation surprises to the upside on November 18 and the MPC signals a December hike, sterling has a clear path back toward 1.3350 and above.

The Dollar at 103.30: Why Every Currency Fell This Week

Sterling’s decline this week was part of a broad dollar rally, and understanding that rally is essential to the forecast.

The U.S. Dollar Index touched 103.30 on Friday, its highest in 19 months, and is on track for its biggest weekly gain since September. The index broke above its 102.83 pivot on Thursday after a bullish flag breakout on the daily chart. Resistance sits at 103.15, 103.23 and then 103.46. A close above 103.46 would extend the dollar’s move.

The Fed is the main driver. Futures markets price a quarter-point hike at the December 8 and 9 meeting as the base case, with odds of a half-point move above 10%. Fed officials across the spectrum have leaned hawkish this week. Waller said a 50-basis-point hike should be considered. San Francisco Fed President Mary Daly warned that AI spending is fueling inflation. New York Fed President John Williams said inflation remains too elevated. Chicago Fed President Austan Goolsbee said Friday that “lately we’re not making any progress” on inflation.

U.S. yields have climbed with Fed expectations. The 10-year Treasury yield reached 5.16% on Friday, its highest since October. The 2-year yield hit 4.867% on Thursday. Higher U.S. yields attract global capital into dollar assets.

Risk aversion added to the dollar’s bid. The Nasdaq Composite fell 1.85% and the S&P 500 dropped 1.09% on Friday, led by a semiconductor rout after Nvidia’s chief executive resigned. Bitcoin fell below $70,000. In risk-off moves, the dollar typically gains as a funding and safe-haven currency, while higher-beta currencies like the pound lose ground.

The breadth of the dollar’s rally matters for sterling. The euro fell to a 19-month low, the yen weakened past 160 per dollar, and Asian currencies came under pressure. Sterling lost 0.91% on the week and the euro lost a similar amount, moving in step with the dollar rather than on domestic news.

That breadth cuts both ways. On the downside, it means sterling has no independent support against a dollar trend this strong. On the upside, it means a turn in the dollar would lift sterling along with every other currency. GBP/USD does not need a UK-specific catalyst to rally; it needs the dollar to peak.

The yen is the wild card. USD/JPY at 160.10 has Japanese officials warning of intervention. A coordinated or unilateral yen intervention would weaken the dollar across the board and could spark a sharp short-covering rally in GBP/USD.

For the forecast, the dollar sets the direction for GBP/USD in the near term. As long as the dollar index holds above 102.83 and the Fed keeps leaning hawkish, sterling will struggle to reclaim 1.3350. A dollar index back below 102.83 would open the path toward the 1.3460 upside target.

EUR/GBP at 0.8361: Sterling’s Edge Over the Euro

The cross rate between the euro and the pound shows that sterling’s weakness this week is a dollar story, not a UK story.

EUR/GBP traded at 0.8361 on Friday, up 0.09% on the day, which shows the pound slipping marginally against the euro. Over the past 12 months, however, EUR/GBP is down 5.22%, meaning sterling has gained more than 5% against the euro across 2026.

The rate gap explains the trend. Bank Rate stands at 4% after the November hike, while the ECB’s deposit rate sits at 2.50%. That 150-basis-point gap in policy rates draws capital toward sterling assets. UK 10-year gilts yield 5.32%, while German 10-year Bunds yield 3.24% to 3.30%, a spread of more than 200 basis points.

The growth gap reinforces it. UK GDP grew 0.7% in the third quarter, while euro area GDP grew 0.4%. France contracted 0.1%, Italy stagnated and Germany grew 0.2%. The UK’s AI-driven services sector has outperformed continental Europe’s industrial base, which is more exposed to energy costs.

The fiscal comparison has shifted. In October, UK gilt yields at 5.38% traded above French yields at 5.08%, and markets priced UK fiscal risk through gilts and sterling directly. Since the budget, UK fiscal concerns have eased while French spreads have remained elevated. France’s 10-year yield reached a 24-year high of 5.14% in late October, and the French-German spread peaked at 174 basis points on October 22. Sovereign risk now sits more in the euro area than in the UK.

The ECB’s leadership transition adds to euro weakness. Christine Lagarde has confirmed she will leave the ECB before her term ends in October 2027, and no successor has been named. The BoE faces no comparable uncertainty.

For GBP/USD, EUR/GBP offers a useful signal. When EUR/GBP falls, sterling is outperforming the euro, which usually means UK-specific factors are supporting the pound. When EUR/GBP rises, the euro is outperforming, which can mean UK-specific risks are building. Friday’s 0.09% rise is small and does not change the annual trend.

The cross also shows where sterling would trade if the dollar’s rally reversed. With EUR/USD at 1.1051 and EUR/GBP at 0.8361, the implied GBP/USD rate is 1.3217, matching the spot price. If EUR/USD recovered to 1.1260, its upside target, and EUR/GBP held steady, GBP/USD would trade at 1.3467, in line with sterling’s own upside target at 1.3460.

For the forecast, sterling’s edge over the euro is structural and likely to persist. Against the dollar, that edge does not help much in the short run, but it means sterling should outperform the euro on any dollar recovery and fall less on any further dollar strength.

Technical Picture: 1.3220 Pivot Zone, 1.3200 Support and 1.3460 Target

The chart shows sterling testing a key pivot zone after a four-day decline, with clear levels on both sides.

GBP/USD is trading inside its 1.3220 to 1.3243 pivot zone after sliding through it on Friday morning. The pound remains below both of its main moving averages, a sign of short-term bearish momentum. Thursday’s break below 1.3279 confirmed the shift from a range to a downtrend.

The support ladder is clear. The first level is the session low at 1.3218, the bottom of the pivot zone. The second is 1.3200, the round number that marks the next major support. The third is 1.3169. A break below 1.3169 would open a move toward the 52-week low at 1.3077, set on November 19, 2025.

Resistance stacks up above. The first level is the top of the pivot zone at 1.3243. The second is 1.3279, the level that broke on Thursday and now acts as resistance. The third is 1.3348, Tuesday’s close and the start of the week’s sharpest decline. Above that, 1.3441 marks Monday’s close.

The upside target sits at 1.3460. That level captures Tuesday’s high at 1.3458 and sits just below the 1.3500 to 1.3502 zone where sterling peaked on November 4 and 5. Reclaiming 1.3460 would erase the week’s decline and signal that the dollar rally has stalled. A move from 1.3230 to 1.3460 is a gain of 230 pips, or 1.7%.

The weekly structure shows a pair in a range rather than a collapse. Sterling has traded between 1.3218 and 1.3502 over the past two weeks, a range of 284 pips. The 2026 average of 1.3430 sits in the upper half of that range.

Momentum indicators point to oversold conditions on the short-term charts after four straight down days. That supports a near-term bounce, especially if U.S. data softens or the dollar index fails to hold above 103.

The bank consensus forecast calls for GBP/USD to rise to 1.3365 by December 2026, a 1% move from spot. That projection sits between the current price and the upside target and reflects expectations that the dollar’s rally will fade as the Fed’s December hike is delivered.

The technical verdict: bearish below 1.3243, neutral between 1.3243 and 1.3348, constructive above 1.3348, with 1.3460 as the upside target and 1.3169 as the downside risk on a confirmed break of 1.3200.

Bull Case: The Path to 1.3460

The upside case for sterling rests on five drivers, and the UK’s fundamentals support most of them.

The first is the BoE’s hiking path. The Bank raised rates to 4% on November 4 with one member voting for a half-point move. Markets price another hike before year-end and a further increase by March. The UK 2-year gilt yield at 4.98% already sits above the U.S. 2-year Treasury at 4.867%. If the October CPI report on November 18 runs hot, the BoE could move in December, widening the short-end rate advantage further.

The second is UK growth. GDP grew 0.7% in the third quarter, 1.9% year over year, far above the BoE’s July projection. AI-driven services growth gives the economy a structural tailwind that continental Europe lacks. Strong growth allows the BoE to keep tightening without recession risk.

The third is fiscal calm. The October 28 budget reassured gilt markets, and the 10-year yield has fallen from its October peak of 5.53% to 5.32%. Gilt yields are now rising on rate expectations rather than fiscal fear, a configuration that supports sterling.

The fourth is a dollar peak. A December Fed hike is fully priced. If the Fed delivers a quarter-point move and signals the cycle is near its end, the dollar would lose its main source of support. Friday’s softer monthly PPI print, at 0.3% against a 0.4% forecast, is one data point in that direction.

The fifth is positioning. GBP/USD has fallen for four straight sessions and sits at a four-week low. Short-term momentum is oversold, and the pair is testing a key pivot zone. A dollar reversal would trigger short covering across the major currency pairs.

The price path is defined. The first target is 1.3279, the level that broke on Thursday. The second is 1.3348, Tuesday’s close. The third is 1.3365, the bank consensus forecast for December. The primary upside target is 1.3460, Tuesday’s high. A move from 1.3230 to 1.3460 is a gain of 230 pips, or 1.7%.

Beyond 1.3460, the November 4 and 5 highs at 1.3500 to 1.3502 represent the next major resistance. A break above 1.3502 would put the pair back above its 2026 average of 1.3430 for good and open a broader recovery, with the January high at 1.3795 the long-term objective.

The bull case does not require a UK-specific shock. It requires the dollar to stop rallying while the BoE stays hawkish. Given that a Fed hike is already priced and UK inflation is heading toward 5%, that combination is plausible within weeks.

Bear Case: 1.3200 Breaks and 1.3077 Comes Into View

The downside case depends on the dollar extending its rally and UK risks resurfacing.

The first risk is a half-point Fed hike. The probability of a 50-basis-point December move has risen from zero a week ago. If U.S. inflation data stays hot, the Fed could move faster than the BoE, widening the dollar’s rate advantage and pushing GBP/USD lower.

The second risk is a dollar breakout. The dollar index at 103.30 is testing resistance. A close above 103.46 would extend the move and pull GBP/USD through 1.3200.

The third risk is UK inflation surprising lower. If October CPI on November 18 comes in below expectations, the odds of a December BoE hike would fall, and sterling would lose its rate support against a hawkish Fed.

The fourth risk is fiscal. The ONS publishes public sector finances for October on November 20. A borrowing overshoot would revive concerns that pushed the 10-year gilt to 5.53% and the 30-year to 6.036% in early October. A return to fiscal-driven gilt selling would hurt sterling.

The fifth risk is the energy shock. The UK is a net energy importer. A renewed spike in oil prices, driven by further attacks on Saudi infrastructure or Gulf shipping, would worsen the UK’s terms of trade, push inflation higher and slow growth. That combination would put the BoE in a bind between fighting inflation and protecting the economy.

The sixth risk is risk aversion. The Nasdaq fell 1.85% on Friday after Nvidia’s chief executive resigned. A deeper equity selloff would drive safe-haven flows into the dollar and away from sterling.

The price path is clear. A daily close below 1.3218 triggers the bearish setup. The first target is 1.3200. The second is 1.3169. A move from 1.3230 to 1.3169 is a decline of 61 pips, or 0.5%. Below that, the 52-week low at 1.3077 is the next major support, a decline of 153 pips, or 1.2%.

The bear case would accelerate if Nvidia disappoints on Tuesday, if the Fed signals a half-point hike, or if UK public finances show a large overshoot on November 20. Any two of those together would put 1.3169 in play within days, and a weekly close below 1.3200 would mark the first such close since early October.

The bear case still runs into a floor on how far sterling can fall. A BoE that has just hiked, a 2-year gilt yielding more than the 2-year Treasury and a growth rate of 0.7% a quarter all limit the downside. A test of 1.3077 would require both a sharper dollar rally and a UK-specific shock.

Verdict: Bearish Below 1.3243, Upside Target 1.3460 on a Dollar Peak

GBP/USD enters the weekend at 1.3230, down 0.91% on the week after touching a four-week low of 1.3218. The pair has fallen for four straight sessions from Tuesday’s high at 1.3458, a decline of 240 pips driven almost entirely by U.S. inflation data, hawkish Fed commentary and a dollar index at its highest level in 19 months.

The near-term bias stays bearish while the pair trades below the top of its 1.3220 to 1.3243 pivot zone. The dollar index at 103.30, a December Fed hike fully priced with a half-point move on the table, and a 10-year Treasury yield at 5.16% all argue against a quick recovery.

The fundamental floor is real. The Bank of England raised rates to 4% on November 4 with one member voting for a larger hike. UK GDP grew 0.7% in the third quarter. UK inflation is heading toward 5%. The 2-year gilt yields 11 basis points more than the 2-year Treasury. Sterling has outperformed the euro by more than 5% over the past year. Those factors explain why GBP/USD has held 1.3218 while EUR/USD broke to a 19-month low.

The levels are defined. On the downside, 1.3218 and 1.3200 are the immediate supports, with 1.3169 and the 52-week low at 1.3077 below. On the upside, 1.3243 is the pivot, 1.3279 the breakdown level, 1.3348 Tuesday’s close, and 1.3460 the upside target, a 230-pip gain from current levels.

The catalysts are clustered. Nvidia reports Tuesday. UK October CPI lands November 18. UK public finances follow on November 20. The Fed decides on December 8 and 9. Each of those events can move the pair by 50 to 100 pips.

The verdict for traders: the dollar is in control for now, but sterling has stronger fundamental support than any other major currency. GBP/USD is bearish below 1.3243, neutral up to 1.3348, and targets 1.3460 once the dollar peaks and the BoE confirms its December path. A hot UK CPI print on November 18 is the most likely trigger for the move. Until then, rallies toward 1.3279 face sellers, and a daily close below 1.3200 would shift the near-term objective to 1.3169. A daily close above 1.3348 would confirm that the dollar’s 19-month high has marked a top for this leg and put 1.3460 within reach before the Fed meets on December 8 and 9.

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