Sterling Holds 1.3229 as BoE Rate Support Offsets 19-Year-High Gilt Yields — 1.3284 Breakout Opens 1.3368

GBP/USD traded at 1.3229 on Tuesday, October 13, 2026, up 22 pips or 0.17% from the prior session’s close near 1.3207. The pair printed 1.32327 at 08:03 UTC, moved to 1.3222 by midday, and spent the European session pinned between 1.3209 and 1.3238, the support and resistance pivots derived from Monday’s range. Sterling’s day has been quiet in price and loud in context.

The pair is coiling. On the two-hour chart, GBP/USD is compressing between a falling trendline from the September highs and a rising support line from last week’s lows. Price sits above the 1.3222 support level with the longer-term moving average still overhead. That leaves sterling in a narrowing wedge where the next move out of the range is likely to be the start of a trend.

The month has been rough. Sterling has weakened 2.05% against the dollar over the past month and is down 0.74% over 12 months. The pound traded near 1.355 on August 17, an over three-month high, slipped to around 1.3490 by mid-September as Fed hike bets built, and broke toward five-week lows near 1.3465 on September 15. From the August peak to Tuesday’s 1.3229, sterling has lost 2.4%.

That decline is milder than the euro’s. EUR/USD fell to a 17-month low of 1.1150 on Monday, the weakest since May 2025, and traded at 1.11936 by 15:13 UTC Tuesday. EUR/GBP sits at 0.8462, based on Tuesday’s prices. The pound has held up better than the single currency because the Bank of England is priced to hike in November, while ECB tightening bets have eroded under French fiscal stress.

The thesis for this forecast is narrow: sterling’s rate support is real, with a November BoE hike priced at roughly 90%, but it is offset by the most stressed government bond market in the G7, a weakening labor market and the October 28 Budget. Those forces have trapped GBP/USD in a triangle between 1.3180 and 1.3284. Wednesday’s U.S. CPI at 8:30 a.m. ET, or 13:30 BST, is the catalyst most likely to break it. A soft print opens 1.3284 and then 1.3323 to 1.3368. A hot print sends the pair through 1.3180 toward 1.3113.

The longer-term map sits on top of that. The October 28 Budget and the BoE’s November decision are the two UK events that will set sterling’s direction into year-end. This week’s U.S. data decides only the starting point.

The BoE’s November Hike: 90% Priced, Four Hikes by Mid-2027

The Bank of England is the pound’s main support. Bank Rate stands at 3.75%, and markets price a November rate increase at roughly 90% probability. Pricing for the path beyond that shows roughly four rate hikes by July 2027. That is a dramatic turn for a central bank that markets expected to keep cutting through 2026 as recently as March.

The shift came from energy. The surge in oil and gas prices tied to the Middle East conflict pushed UK inflation back up, with the latest reading at 3.1% in August, up from 2.9%. Early in the conflict, traders priced only a 50% chance of a BoE hike by November. That probability has now climbed to 90%.

MPC members have leaned hawkish in public. Megan Greene argued that the 3.75% Bank Rate may not be restrictive enough. Deputy Governor Dave Ramsden said he would support rate hikes if inflationary pressures persist, echoing earlier warnings from Governor Andrew Bailey. The committee has prepared markets for tightening without committing to a specific date.

There is no BoE decision in October. The next meeting falls in November, after the October 28 Budget. That sequencing matters: the MPC will see the government’s fiscal plans before deciding, and a Budget that adds to inflation through tax increases on consumption would strengthen the case for a hike. A Budget built on spending restraint would ease it.

The rate gap with the U.S. is small. The Fed’s target range sits at 3.75%-4.00% after its September 16 hike, so Bank Rate at 3.75% matches the bottom of the U.S. range and sits 25 basis points below the top. Compare that with the ECB at 2.50%, a 150-basis-point gap against the Fed’s upper bound. That is the structural reason sterling has outperformed the euro.

The forward path favors the pound against the dollar on paper. Fed funds futures price a 21% chance of an October Fed hike and an 88% chance by December, with the market assigning an 80.6% probability that the Fed holds at its October 27-28 meeting. If the BoE hikes in November and the Fed hikes once by December, the gap stays at 25 basis points. If the BoE delivers the four hikes priced through mid-2027 while the Fed stops at one more, sterling would carry a rate advantage over the dollar for the first time this cycle.

The risk to that picture is that the BoE hikes into a weakening economy. Rate support works for a currency only when markets believe the hikes are sustainable. A hike that tips the UK into recession can weaken sterling rather than strengthen it.

Gilt Stress: 10-Year Yields at 19-Year Highs, 30-Year Above 6%

The UK government bond market is the pound’s main vulnerability. UK 10-year gilt yields climbed to 5.44% on September 28, the highest since July 2007, and reached 5.5% at the peak of the selloff. The 30-year gilt yield pierced 6% on October 1, a level not seen since 1998. Yields hovered below 5.4% at the end of September, slightly off the 19-year high.

The government’s own borrowing costs show the strain. The Debt Management Office sold £4.25 billion of 4.875% gilts maturing in July 2036 at an average yield of 5.383%, the highest 10-year borrowing cost at auction since 1999. Investors demanded higher premiums amid inflation risks and expectations of increased government spending in the Budget. The DMO’s 2026-27 financing remit sets a £257.1 billion net requirement, funded primarily through gilt sales. That is a large supply of bonds to sell into a market already demanding record-high yields.

Gilt yields have risen more sharply than equivalent U.S. or German benchmarks throughout 2026. The U.S. 10-year Treasury yield traded at 5.19% to 5.22% Tuesday, after touching its highest level since 2002 last week. Gilts at 5.4% to 5.5% sit above Treasuries, a premium that reflects both higher UK inflation and a fiscal risk premium specific to Britain.

The real-economy impact is immediate. Fixed mortgage pricing is anchored to swap rates, which track gilt yields. Lenders withdrew residential deals priced below 5% as yields surged in early October. Higher mortgage rates squeeze household budgets in a country where most homeowners refinance onto new fixed rates every two to five years.

For sterling, the gilt picture creates a dangerous mix. Rising yields usually support a currency by attracting capital. But when yields rise because investors fear fiscal sustainability, the currency can fall alongside bonds. That is the pattern traders fear ahead of the Budget: a disorderly gilt selloff paired with a weaker pound.

The government is aware of the risk. A former BoE chief economist warned that the government must act to appease financial markets. A Budget that reassures markets could ease gilt pressure and give lenders room to hold or cut fixed rates. A Budget that loosens fiscal policy or lacks credibility could push 30-year yields well above 6%.

For now, gilt stress is contained. The pound has held 1.32 through the September selloff and the October 1 break above 6% on 30-year yields. But the market is waiting for the October 28 Budget before deciding whether the stress is temporary or structural.

The October 28 Budget: Restrictive Fiscal Policy Meets a Fragile Economy

The October 28 Budget is the single biggest UK event for sterling this quarter. The government is seeking to ease cost-of-living pressures while holding its fiscal rules, and it is doing so with 10-year borrowing costs at 19-year highs.

The fiscal arithmetic is tight. The government needs to fund a £257.1 billion net financing requirement this fiscal year. Every 10-basis-point rise in gilt yields adds to debt-servicing costs and shrinks the headroom against fiscal rules. Higher interest rates have already eaten into the room the government had at the last fiscal event.

The combination of restrictive monetary and fiscal policies is putting pressure on the UK economy ahead of the Budget. With the BoE priced to hike and the Treasury forced to tighten or hold spending to satisfy bond markets, the UK faces tightening from both directions. That is a recipe for weak growth.

The IMF has lowered its outlook. It expects UK growth to average 1.3% in 2026 and 1.2% in 2027, and it sees higher energy prices and interest rates hitting growth. The IMF forecasts UK inflation to average 3.3% in 2026, well above the BoE’s 2% target.

The Budget’s interaction with monetary policy matters for sterling in a specific way. A Budget that raises taxes on consumption or energy could add to headline inflation through 2026. That would push the BoE to hike more, which would lift short-dated yields and support sterling. A Budget that leans on spending cuts would reduce inflation pressure, lower BoE hike odds and weigh on the pound. A Budget that loses market credibility would hit both gilts and sterling at once.

Recent precedent offers a template. At the November 2025 Budget, gilt prices rose and sterling appreciated after the announcement, as investors judged the government’s efforts to restore fiscal headroom credible. Both had fallen in the days before as the government appeared to backtrack on tax plans. Markets reward credibility and punish U-turns.

The positioning into the Budget is cautious. Sterling traders have been reluctant to take sizeable positions ahead of major UK events, and the triangle on the GBP/USD chart reflects that hesitation. The pair is likely to stay range-bound until the Budget unless U.S. data delivers a decisive shock.

For the forecast, the Budget sets the medium-term direction. A credible Budget that stabilizes gilts with 10-year yields falling back toward 5.2% would support a move toward 1.34. A Budget that triggers a renewed gilt selloff could push GBP/USD back toward 1.31.

UK Labour Market: Unemployment at 4.9%, Private Pay Growth at 2.8%

The UK labor market is cooling, and that is the main argument against an aggressive BoE tightening cycle. The unemployment rate held at 4.9% in the three months to July, below the 5.0% that economists expected but well above the 4.1% to 4.4% range of 2024. The economy created 67,000 jobs in that period, down from 83,000 in the three months to June.

The earlier data showed the deeper weakness. In the three months to June, unemployment held at 4.9% against a 4.8% consensus. Private-sector regular pay growth fell to 2.8%, the weakest since the three months to October 2020. Public-sector pay growth reached 6.1%, lifted by the timing of NHS awards. Vacancies slipped to 707,000 in May to July, the lowest since late 2014 outside the pandemic. Early payroll estimates showed a 13,000 fall in July, matching June’s decline.

Payroll data confirms the trend. The number of payrolled employees fell by 78,000, or 0.3%, between June 2025 and June 2026. The early estimate for July 2026 showed payrolls down 94,000 on the year.

That labor market picture is at odds with a central bank priced for four hikes. Private-sector wage growth at 2.8% is below the level consistent with 2% inflation over time. Vacancies at their lowest in more than a decade show demand for workers fading. The BoE’s case for hiking rests on energy-driven headline inflation and the risk of second-round effects, not on a tight labor market.

The next test arrives October 20. The ONS publishes its labour market report for the three months from June to August on Tuesday, October 20, at 7:00 a.m. London time. That release will land eight days before the Budget and roughly two weeks before the BoE’s November decision. A rise in unemployment to 5.0% or higher would challenge the 90% November hike pricing. A stable or falling rate would reinforce it.

The labor data also shapes fiscal politics. Rising unemployment increases welfare spending and lowers tax receipts, both of which squeeze the government’s fiscal headroom ahead of the Budget. Weak private-sector pay growth limits income tax receipts. A cooling labor market makes the fiscal arithmetic harder.

For sterling, the labor market is a slow-moving headwind. Each soft jobs report raises doubts about whether the BoE will deliver the hikes priced, and each doubt erodes the rate support that has kept the pound above 1.32. The October 20 release is the next point where that tension could break.

UK Inflation at 3.1%: Energy Drives the Headline, the BoE Watches Second-Round Effects

UK consumer price inflation rose to 3.1% in August, up from 2.9% in July. The acceleration was driven primarily by energy, as oil and gas prices surged on the Middle East conflict. The IMF expects inflation to average 3.3% across 2026.

The energy backdrop has not eased. Brent crude traded at $105.70 on Tuesday after touching $107.33 on Monday, its highest level in almost a month. WTI traded at $93.68. Houthi strikes on Saudi Arabia, tanker attacks near the Strait of Hormuz and a refined-product squeeze that has left Gulf product exports at 60% of prewar levels keep energy prices elevated. The UK imports most of its gas and a large share of its oil, which makes it more exposed to the energy shock than the U.S.

The BoE’s concern is second-round effects. Energy price spikes become a monetary policy problem when they feed into wages, services prices and inflation expectations. So far, private-sector wage growth at 2.8% shows limited pass-through to pay. But services inflation and inflation expectations are the variables MPC members cite when arguing for hikes.

The September CPI print, due next week, will be the next data point. It lands after this week’s U.S. CPI and before the October 20 labor report and the October 28 Budget. A rise above 3.1% would reinforce November hike pricing.

The comparison with the U.S. is instructive. U.S. inflation stood at 3.4% in August, above the UK’s 3.1%. The Fed has already hiked once and is priced for another. The BoE has not hiked yet. That gap in policy response despite similar inflation readings is part of why sterling has lagged the dollar this month: the Fed has acted, while the BoE has only signaled.

Inflation dynamics favor the pound over the euro. Euro-area inflation hit 3.8% in September and German inflation reached 3.3%, both higher than the UK, but the ECB’s tightening path has been constrained by French fiscal stress. The BoE faces gilt stress too, but it has not shied from hawkish signals in the way the ECB has.

For the forecast, UK inflation is a medium-term support for sterling through the BoE channel. As long as headline inflation runs above 3%, the BoE has political cover to hike, and the November decision stays live. The risk is that the energy shock eases faster than expected, pulling headline inflation down and removing the hike rationale before the BoE acts.

The Dollar Side: DXY Near an 18-Month High, Fed at 3.75%-4.00%

The dollar has been the dominant driver of GBP/USD in October. The dollar index traded at 102.40 on the four-hour chart Tuesday, respecting a rising trendline and holding near an 18-month high. Resistance sits at 102.61, with 102.97 and 103.36 above. Support is at 102.10, then 101.75 and 101.43. As long as the DXY holds above 102.10, the dollar’s trend remains bullish.

The dollar’s backdrop softened modestly on Tuesday. The 10-year Treasury yield fell roughly 5 basis points to 5.19%, and oil prices pulled back early in the session. Both reduced the upward pressure from inflation concerns. GBP/USD’s 22-pip gain tracked that softening.

The Fed’s stance is the anchor. The FOMC raised its target range to 3.75%-4.00% on September 16, its first hike since 2023. Markets assign an 80.6% probability that the Fed holds at its October 27-28 meeting, with a 21% chance of a hike. The December pricing is far more hawkish, at 88%.

Fed officials are split on the path. Cleveland Fed President Beth Hammack said Monday that underlying inflation runs around 2.5% to 3.0% and that the labor market does not need to be damaged unnecessarily to cool inflation, but she argued demand still needs to be weakened and that the Fed should move relatively quickly toward a more restrictive stance.

U.S. labor data has softened. On October 2, the Bureau of Labor Statistics reported just 29,000 new nonfarm jobs for September, with unemployment rising to 4.2%. Average hourly earnings increased 0.1% for the month, and August payroll growth was revised down to 133,000. That soft report pulled October hike odds down from 70.9% to below 25% within a week.

U.S. inflation is the counterweight. One-year inflation expectations reached 3.9% in the latest New York Fed survey, the highest since May 2023. U.S. inflation stood at 3.4% in August. With crude above $90 through the September survey period, Wednesday’s headline CPI is likely to run hot.

The structural support for the dollar is its yield. With the 10-year Treasury at 5.19% to 5.22% and the Fed priced for another hike, dollar assets offer some of the highest real returns in the developed world. That pulls capital toward the dollar and away from currencies whose central banks are lagging.

For GBP/USD, the dollar side dominates the next 48 hours. A soft CPI that weakens the DXY below 102.10 would push sterling through the top of its triangle. A hot CPI that breaks the DXY above 102.61 would push sterling through the bottom.

Wednesday’s U.S. CPI at 13:30 BST: The Trigger for the Triangle Break

September U.S. CPI arrives Wednesday, October 14, at 8:30 a.m. ET, or 13:30 BST. It is the last major U.S. inflation print before the October 27-28 FOMC meeting, and it is the event most likely to break GBP/USD out of its triangle.

The market’s base case is that the Fed holds in October. The expectation is for a moderate monthly core print of 0.2% or less. An upside surprise on core could quickly revive pricing for an October hike, pushing the dollar higher and sterling lower. A soft print would cement the October hold and start to erode the 88% December pricing.

The headline number has upside risk from energy. WTI crude held above $90 through much of September, and U.S. gasoline prices have tied 2022’s record for the most days above $4 a gallon in a single year. The market will look through a hot headline and focus on core.

The asymmetry for sterling is clear. GBP/USD is compressed in a triangle with a 104-pip range between 1.3180 and 1.3284. A breakout from a compression pattern typically produces a move equal to or larger than the pattern’s height. A clean break above 1.3284 would target 1.3323 and 1.3368. A break below 1.3180 would target 1.3147 and 1.3113.

The rest of the week stacks more U.S. data behind CPI. PPI and retail sales follow on Thursday. Fed officials appear at the IMF on Friday. Each print feeds into the October and December Fed pricing, and each moves the dollar.

UK data this week is light. With the labor report on October 20, CPI the following week and the Budget on October 28, the UK calendar is backloaded. That leaves U.S. data in control of GBP/USD for the next several sessions.

The timing gives London traders a front-row seat. The 13:30 BST release lands in the middle of the London-New York overlap, the most liquid window of the trading day. The first 30 minutes after the print will set the tone, and the triangle’s tight range means even a moderate surprise could trigger the breakout.

For the forecast, CPI is the short-term catalyst and the Budget the medium-term one. A soft CPI breakout above 1.3284 would need the Budget to confirm it. A hot CPI breakdown below 1.3180 would put the pound on the defensive into the Budget.

Sterling Versus the Euro: Why the Pound Has Held Up Better

The pound has outperformed the euro against the dollar this month, and the reasons say a lot about what supports sterling. EUR/USD hit a 17-month low of 1.1150 on Monday, while GBP/USD has held above 1.32. Using Tuesday’s prices, EUR/GBP sits at 0.8462.

The rate gap is the core of the divergence. The ECB’s deposit rate sits at 2.50%, 150 basis points below the Fed’s upper bound. Bank Rate at 3.75% sits just 25 basis points below. A carry trader borrowing in euros and holding dollars earns six times the spread of one borrowing in sterling.

The forward paths diverge too. The BoE is priced at roughly 90% for a November hike, with four hikes through mid-2027. ECB hike pricing for October 29 has eroded from about 60% in late September as French spreads widened. The ECB faces a sovereign stress problem in France, with the French-German 10-year spread near 137 basis points against a longer-run mean of about 110. Germany’s inflation rose to 3.3% in September from 2.9%, and the Bank of France estimates French third-quarter growth at only 0.1%.

The UK has its own sovereign stress, with gilt yields at 19-year highs and 30-year yields above 6%. But that stress has pushed the BoE toward hiking rather than away from it, because the BoE’s mandate is inflation and gilt pressure reflects inflation risk. In the euro area, the ECB must balance inflation against the risk that hikes destabilize French debt, which has made it more hesitant.

Positioning reinforces the gap. Euro short positions are the heaviest since December 2024, according to market positioning data. Sterling has not seen the same crowding on the short side, which leaves it less vulnerable to a positioning unwind but also less likely to benefit from a squeeze.

The euro’s weakness spills over into sterling at the margin. A falling euro pulls down all European currencies through cross-currency flows, and a strong dollar against the euro lifts the DXY, which weighs on GBP/USD. Sterling has held up relatively but not absolutely.

For the forecast, the euro comparison sets expectations. If the dollar weakens on a soft CPI, both GBP/USD and EUR/USD rally, but the euro is likely to rally harder because it is more oversold and more crowded on the short side. If the dollar strengthens, sterling is likely to fall less than the euro because of its rate support. EUR/GBP has upside risk on a soft CPI and downside risk on a hot one.

FTSE 100 Climbs as Banks Lead: The Equity Flow Picture

UK equities offered a modest support for sterling on Tuesday. Britain’s FTSE 100 rose 0.7% at midday, outperforming the CAC 40’s 0.1% gain and the DAX’s 0.3% rise. Banks led the advance, and the index climbed even with gilt yields near a 19-year high.

Higher rates help UK banks through net interest margins, and the BoE’s hawkish path supports that trade. European banks led a 1.21% recovery on Monday after shedding roughly 8% over the prior two sessions. UK lenders have benefited from the same dynamic.

U.S. bank earnings set the tone Tuesday morning. Goldman Sachs earned $17.01 a share, Citigroup $2.85, and Wells Fargo $1.87, while JPMorgan missed at $5.57. Strong trading and investment banking results supported financial stocks globally, though U.S. bank shares faded from their opening gains.

The broader equity backdrop was risk-off in technology. South Korea’s KOSPI crashed 5.46% on a memory-chip shock, and U.S. semiconductor stocks fell sharply, with Micron down 4.45% to $945.03. The S&P 500 was down 0.12% at 7,798.11 and the Nasdaq down 0.17% at 27,200.61 by mid-morning. The FTSE 100, with its heavy weighting in banks, energy and mining and a light weighting in technology, is structurally insulated from that kind of selloff.

That insulation matters for sterling flows. In a tech-led global selloff, capital rotating into value-heavy markets like the UK provides a modest bid for the pound. The FTSE’s outperformance Tuesday reflects that rotation.

Energy is another FTSE support. With Brent above $105, UK-listed oil majors benefit from elevated prices, and the FTSE’s energy weighting lifts the index when crude rallies. That creates a partial hedge for sterling: higher oil hurts the UK economy and pushes up inflation, but it also supports the equity market and the BoE hike case.

For the forecast, equity flows are a secondary support. They are unlikely to drive GBP/USD on their own, but in a scenario where the U.S. dollar weakens on soft CPI and global risk appetite rotates out of tech into value, UK assets would benefit on both the currency and equity sides.

Technical Map: Triangle Between 1.3180 and 1.3284, Key Pivot at 1.3222

The chart is unusually clean. GBP/USD trades inside a narrowing triangle between a falling trendline from the September highs and a rising support line from last week’s lows. Momentum is neutral, with the RSI holding just above the midline.

The resistance stack is layered. The first is 1.3238, the R1 pivot from Monday’s session. The second is 1.3284, the top of the triangle and the breakout trigger. Above that, 1.3302 to 1.3314 marks a resistance zone, with 1.3323 the first breakout target and 1.3368 the second. 1.3400 serves as a wider resistance reference, and the August peak near 1.355 sits above that.

The support stack mirrors it. The first is 1.3222, the immediate support that sterling has held through Tuesday. The second is 1.3209, the S1 pivot. The third is 1.3194, then 1.3180, the bottom of the triangle and the breakdown trigger. Below that, 1.3150 and 1.3147 mark the next support zone, followed by 1.3113 and 1.3100.

The distance math from 1.3229 sets the risk-reward. Upside to 1.3284 is 55 pips, or 0.42%. Upside to 1.3323 is 94 pips, or 0.71%. Upside to 1.3368 is 139 pips, or 1.05%. Downside to 1.3180 is 49 pips, or 0.37%. Downside to 1.3147 is 82 pips, or 0.62%. Downside to 1.3113 is 116 pips, or 0.88%.

The first move is balanced: 55 pips to the top of the triangle against 49 pips to the bottom. The second move slightly favors the upside, with a breakout to 1.3368 offering 139 pips against a breakdown to 1.3113 offering 116.

The triangle’s height defines the measured move. At 104 pips from 1.3180 to 1.3284, a breakout typically projects a move of similar size from the breakout point. An upside break from 1.3284 projects toward 1.3388, close to the 1.3400 resistance. A downside break from 1.3180 projects toward 1.3076, just below 1.3100.

Until GBP/USD breaks above 1.3284 or below 1.3180, the pair remains neutral. The longer-term moving average overhead caps rallies, and the rising support line underneath caps declines. CPI on Wednesday is the most likely catalyst for the break.

Verdict: Neutral in the Triangle, Upside Bias on Rate Support; Soft CPI Targets 1.3368

GBP/USD’s verdict for October 13 is neutral within its triangle, with a modest upside bias from rate support. The pair at 1.3229, up 22 pips or 0.17% on the day, is compressing between 1.3180 and 1.3284 ahead of Wednesday’s U.S. CPI at 13:30 BST. It has lost 2.05% over the past month and 2.4% from its August peak near 1.355.

The bear case rests on the dollar and UK fiscal stress. The dollar index holds near an 18-month high at 102.40, with a bullish trendline above 102.10. Fed funds futures price an 88% chance of a December hike. UK 10-year gilts hit 5.44% to 5.5%, their highest since July 2007, and 30-year yields broke 6% for the first time since 1998. The DMO paid 5.383% at a 10-year auction, the highest since 1999. Private-sector pay growth has slowed to 2.8%, vacancies have fallen to 707,000, and unemployment sits at 4.9%. The IMF sees UK growth at 1.3% in 2026 and 1.2% in 2027. The October 28 Budget carries the risk of a gilt-and-pound selloff if markets judge it unconvincing.

The bull case rests on the BoE. A November rate hike is priced at roughly 90%, with four hikes priced through mid-2027. MPC member Megan Greene said 3.75% may not be restrictive enough, and Deputy Governor Ramsden backed hikes if inflation pressures persist. UK inflation at 3.1% and an IMF forecast of 3.3% for 2026 give the BoE cover to act. Bank Rate sits just 25 basis points below the Fed’s upper bound, against 150 basis points for the ECB, which has kept sterling well above the euro’s performance this month.

The levels are clear. Resistance at 1.3238, then 1.3284, then 1.3302 to 1.3323 and 1.3368. Support at 1.3222, then 1.3209 and 1.3180, then 1.3147 and 1.3113.

The forecast: a soft core CPI print Wednesday weakens the dollar index below 102.10 and pushes GBP/USD through 1.3284, targeting 1.3323 and then 1.3368, a 139-pip or 1.05% gain from current levels. A hot core print revives October Fed hike pricing, lifts the DXY above 102.61 and sends GBP/USD through 1.3180 toward 1.3113, a 116-pip or 0.88% decline. Beyond this week, the October 20 labour report and the October 28 Budget set the medium-term direction. Given BoE hike pricing and the narrow Fed-BoE rate gap, the upside path carries a modestly higher probability in the near term, but sterling’s ceiling remains capped near 1.34 until the Budget clears gilt-market risk.

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