GBPUSD tests key support under fundamental pressure

The British pound continues to struggle in the foreign exchange market following the release of middle-of-the-road UK inflation data. These figures have led investors to believe that a Bank of England (BOE) interest rate cut is coming soon. On Friday, the GBPUSD pair works hard to stay above the earlier breached key psychological support of 1.3300.

From a technical perspective, conditions are emerging for a short-term rebound, even though the broader trend has been negative since September. After a sharp drop, the price has stabilized near the 23.6% Fibonacci retracement at 1.33000. The Stochastic Indicator is getting closer to the oversold zone, with its %K at 26 and %D at 42, hinting at a new bullish signal. Although the Chaikin Oscillator remains in negative territory, showing that sellers are in control, its pace of decline is slowing, suggesting fading bearish momentum. This mix of growing buyer interest at the 1.3300 support and the Stochastic nearing oversold sets the stage for a possible short-term bounce towards the 38.2% (1.3339) and 61.8% (1.33865) Fibonacci retracements.

However, fundamental factors keep pressuring the British currency, limiting the scope for any significant recovery. Besides weak inflation data, uncertainty is mounting ahead of the UK budget announcement on November 26. The meeting is likely to include tax hikes and spending cuts aimed at reducing its deficit, potentially creating new risks for investors worried about the country's record-high public debt.

The US dollar's gaining strength is also adding to the strain on the pair. Ahead of the upcoming summit between President Trump and Chinese leader Xi Jinping, global markets face heightened uncertainty, which typically boosts demand for the greenback as a safe-haven asset. However, the dollar's potential for further strengthening is limited by the near-certainty that the Fed will ease monetary policy in the coming days.

Consider the following trading plan:

Sell GBPUSD on a rebound from 1.33000. Take profit: 1.32470. Stop loss: 1.33865.

This forecast is relevant from October 24 till October 31, 2025.