GBPUSD has one more correction target left at 1.348

This week, the GBPUSD currency pair reached a two-month high at 1.3725, only to plummet sharply thereafter. A long upper shadow on a reversal candlestick pattern indicates active profit-taking by bulls, which allowed bears to seize the initiative. The price broke out of an ascending channel on the four-hour (H4) timeframe and found support at the 50% Fibonacci retracement level (1.353). At the same time, sellers of the British pound against the US dollar have one last short-term target at the 61.8% Fibonacci (1.348).

The current technical setup is quite ambiguous. The RSI indicator approached oversold territory, but no clear signal for an upward reversal has been formed yet. Meanwhile, the MACD has just entered a negative zone, still pointing to the pair’s downside potential. An important confirmation of a deeper drop in price will be a consolidation under the 200-period moving average, which is now slightly above 1.351.

The outcomes of the recent Fed decision, which could not be called dovish, despite a 25-basis-point rate cut, triggered GBPUSD’s reversal. The Bank of England (BoE), by contrast, kept borrowing costs unchanged during yesterday’s meeting, but slowed the pace of its balance sheet reduction from 100 to 70 billion pounds for the next twelve months. Analysts surveyed by Reuters view this step as the UK regulator’s attempt to ease pressure on the bond market and avoid sharp fluctuations ahead of the budget plan for 2026.

Although it will not be presented until November 26, investors do not doubt a second consecutive tax hike. Reuters believes that the UK has the greatest risk of slipping into stagflation among all developed economies. High inflation coupled with sluggish GDP growth reduces the pound’s appeal despite rather tight monetary conditions.

Consider the following trading strategy:

Sell GBPUSD in the 1.353-1.358 range. Take profit: 1.348. Stop loss: 1.363.