The GBP/USD pair extended its recovery for the third consecutive session on Friday, consolidating gains near the mid-1.3400s during the Asian trading hours. The pair has rebounded steadily from its lowest level since early August (1.3250–1.3245 zone) earlier this week, buoyed by persistent US Dollar (USD) weakness. However, lingering concerns over the UK’s fiscal outlook and monetary policy expectations continue to temper bullish momentum.
The US Dollar remains broadly offered amid mounting bets on additional Federal Reserve rate cuts and a prolonged US government shutdown, which has kept demand for the greenback subdued across the board. This backdrop has provided modest tailwinds to the British Pound (GBP), though sentiment toward the UK currency remains cautious following weak domestic labor market data released earlier this week.
Tuesday’s disappointing employment figures reinforced speculation that the Bank of England (BoE) may continue easing policy at a gradual pace. At the same time, worries about the UK’s fiscal position ahead of November’s Autumn Budget are limiting the scope for aggressive GBP upside. These factors together are preventing traders from taking large directional positions, keeping GBP/USD gains in check for now.
From a technical standpoint, the pair’s decisive move above the 100-period Simple Moving Average (SMA) on the 4-hour chart and a sustained break beyond the 38.2% Fibonacci retracement of the September decline suggest a strengthening bullish bias. Momentum indicators are also trending higher, supporting prospects for an extension of the ongoing recovery.
If the upward momentum continues, the next resistance is seen near the 1.3480–1.3485 region (50% Fibonacci retracement), followed by the psychological 1.3500 level. A clear break above this zone could open the door for further gains toward the 1.3545–1.3550 region, aligning with the 61.8% Fibonacci level.
On the downside, initial support lies near 1.3400, followed by the 1.3355 area (23.6% Fibonacci retracement). A sustained break below this zone could shift the near-term bias back in favor of sellers, exposing the 1.3300 handle and potentially the recent multi-week low around 1.3250–1.3245.
