GBP/USD Price Forecast: Above key support, bullish bias persists ahead of BoE decision

• 1.3490 is the level around which GBP/USD retains gains early in Thursday’s European session.
• Above the 100-day SMA, the pair’s outlook remains positive, supported by bullish RSI momentum.
• At 1.3505, immediate resistance awaits; initial support stands at 1.3390.

GBP/USD is near 1.3490. The pair remains higher in early European trading on Thursday, as the US Dollar (USD) weakens against the British Pound (GBP) following the Democrats’ takeover of the US Congress in the midterm elections.

Control of both the Senate and House of Representatives passes from Republicans to Democrats after the latter secured majorities. Tens of millions of voters delivered a sharp rebuke to President Donald Trump, handing Democrats major victories in several Republican strongholds for the first time in decades.

Ray Attrill, head of FX strategy at National Australia Bank, said: "A lot of the market moves that we're seeing, particularly in bonds, I think can be traced directly to that, as well as a weaker dollar on the back of lower Treasury yields,"

Attention turns later on Thursday to the Bank of England (BoE) interest rate decision. Economists surveyed by Reuters expect the UK central bank to lift Bank Rate from 3.75% to 4% at its November policy meeting. If delivered, it would be the first increase since August 2023.

Beyond a rate rise this month, financial markets are pricing in at least three quarter-point increases next year. That path would lift UK interest rates above the levels projected for the US.

0.4% Intraday Gain: Pound Follows Euro Ahead of BoE Decision

The Pound is closely tracking the single currency’s advance against the Dollar, according to Scotiabank strategists, who describe “the GBP … pacing the EUR’s gains versus the USD, rising around 0.4% intraday.” Recent activity figures provided little additional direction: “final UK Services and Composite PMI data for October were revised slightly lower to 52.8 and 52.9 respectively.” The focus instead is shifting to policy. Scotiabank says that, “beyond the USD fallout from the mid-terms, GBP attention will quickly shift to tomorrow’s BoE policy decision,” adding that “a ¼ point hike is all but fully priced in at this point, with swaps anticipating a further 75bps of tightening from the BoE beyond tomorrow over the next year or so.”

Technical Outlook: 100-Day SMA Underpins Bullish GBP/USD Bias

Holding above both the 100-day Simple Moving Average (SMA) and the middle band of the 20-day Bollinger Bands, GBP/USD retains a bullish bias on the daily chart. Spot is pushing into the upper half of its recent range, although the upper Bollinger band presents an immediate obstacle. At about 66, the Relative Strength Index (14) signals solid upward momentum while suggesting the pair is approaching overbought territory.

Around 1.3505, the upper Bollinger band marks the first resistance. Closing above it on a daily basis would clear a path towards the 15 July high of 1.3558, followed by the 25 August high of 1.3655.  

The 100-day SMA at 1.3390 provides significant downside support, ahead of the middle Bollinger band near 1.3345. Losing these levels would undermine the bullish structure and bring the lower Bollinger band, close to 1.3185, into view.

(The technical analysis of this story was written with the help of an AI tool. Know more.)