GBPUSD sell-off targets 1.3200

While the two central banks keep trying to tame stubborn inflation, the GBPUSD pair finds itself in a tight hawkish grip. This is a rather unique picture, with both regulators attempting to raise interest rates. The Federal Reserve’s approach ranks as the second strictest on the list. The Bank of England takes an honorable fifth place—a more neutral position. The monetary divergence between the Fed and the BoE is currently shaping a moderately bearish outlook for the pair in the medium term.

What is keeping the pound under pressure? A key headwind is the September meeting of US policymakers led by new Chair, Kevin Warsh. Their unanimous decision to hike rates to the 3.75%–4.00% range gave the greenback a significant investment boost. The Fed’s dot plot points to a 4.10% target by year-end, along with officials’ determination to keep monetary conditions tight throughout 2027. This is another argument for a stronger dollar in the long run.

On September 17, the BoE held borrowing costs at 3.75%. Despite a hawkish pause and a split within the committee—three members voted for a raise to 4.00%—the British rate level remains below that of the US. The UK central bank is seriously concerned that inflation could climb to 4% in early 2027, driven by the ongoing Middle East conflict, but its wait-and-see approach deprives the pound of immediate support.

Another obstacle in sterling’s path is the commodity crisis. Crude prices above $100 per barrel create strong pro-inflationary pressure in the UK, slowing the country’s GDP growth. Meanwhile, the US economy remains resilient to the fuel shock, thanks to its own energy sector.

Given the Fed’s more hawkish stance, shorting the pair seems to be the preferred strategy for the coming months, with a downside target of 1.3200.

The overall recommendation is to sell GBPUSD. Profits should be taken at 1.3200. Stop Loss could be set at 1.3530.

The volume of the open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.