Is the British Pound Losing Momentum Near 1.3400 as US Business Strength Bolsters the Dollar?

Renewed Dollar demand pushes GBP/USD down 0.16% to 1.3378.
Despite softer consumer sentiment, US Manufacturing PMI climbs to 56.
Ahead of next week's Fed decision, UK Retail Sales lose considerable momentum.

Sterling comes under pressure against the US Dollar on Friday, losing around 0.16%, with GBP/USD trading at 1.3366. The decline comes as US business activity expands, even as consumer sentiment deteriorates and households complain about elevated prices.

Can GBP/USD withstand firm US activity and disappointing UK Retail Sales?

Against a backdrop of persistently high Middle East tensions, US President Trump said that “we could end the war with Iran very quickly”, adding that “do we want to finish it or let it within is the question.” He offered reassurance that the Strait of Hormuz remains under US control.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Attacks on Saudi Arabian interests by the Houthis continued. Iran’s IRGC also kept striking ships passing through the Strait via an “illegal route.”

US releases pointed to continued, though slower, growth in business activity. October's S&P Global Manufacturing PMI stood at 56, compared with 55.9 in September, while the Services PMI eased to 57.9 from 58.8, in line with economists' expectations. Higher prices and expectations of higher rates were cited as reasons for the University of Michigan Consumer Sentiment Index slipping to a five-month low in October. The index edged down to 48 from the previous month's 48.1.

For inflation expectations, the one-year reading held steady at 4.7%, while the five-year measure stood at 3.5%.

As the Greenback recouped part of its earlier losses, GBP/USD gave up some gains. Tracking the Dollar against a basket of six currencies, the US Dollar Index (DXY) stands at 101.79, up 0.17%.

Traders' attention next week turns to the Federal Reserve's monetary policy decision and the release of the Core Personal Consumption Expenditures (PCE) Price Index.

UK releases presented a mixed picture. Retail Sales slowed from 2.7% to 0.8% over the same period, missing forecasts, whereas the S&P Global Composite PMI advanced to 53.1 from September's 52.0.

On Friday, British Prime Minister Andy Burnham said businesses would receive “breathing space to grow.” from next week’s first annual budget statement.

GBP/USD Price Forecast: Can the pair overcome technical resistance?

Chart Analysis GBP/USD — Daily chart for GBP/USD

A bearish near-term bias persists on the daily chart, where GBP/USD is trading at 1.3367. The pair remains below both the cluster of simple moving averages near 1.3404 and resistance at 1.3402 on the descending trend line originating at 1.3653. Former rising trend supports higher up, at 1.3628 and 1.3811, also sit above the current price and now serve as barriers. At 54.5, the Relative Strength Index (14) suggests only limited corrective upward momentum, rather than a lasting turn towards a bullish trend.

To relieve immediate selling pressure, the pair would need a daily close above the nearby resistance area: first the descending trend line around 1.3402, then the cluster of three simple moving averages at 1.3404. Beyond that area, the erstwhile rising trend supports at 1.3628 and 1.3811 mark successively stronger resistance zones. Should the decline continue, buyers could try to check the fall near 1.3266, where the breached resistance trend line provides the nearest major structural support.

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

How Has Pound Sterling Performed This Week?

Sterling recorded its strongest performance against the US Dollar this week. The table below sets out the British Pound's (GBP) percentage moves against the major currencies listed.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.08%	-0.44%	-0.64%	-0.83%	-1.06%	-0.75%	-0.14%
EUR	0.08%		-0.33%	-0.54%	-0.72%	-0.89%	-0.62%	-0.04%
GBP	0.44%	0.33%		-0.23%	-0.38%	-0.56%	-0.30%	0.35%
JPY	0.64%	0.54%	0.23%		-0.17%	-0.40%	-0.09%	0.63%
CAD	0.83%	0.72%	0.38%	0.17%		-0.24%	0.12%	0.73%
AUD	1.06%	0.89%	0.56%	0.40%	0.24%		0.24%	0.88%
NZD	0.75%	0.62%	0.30%	0.09%	-0.12%	-0.24%		0.65%
CHF	0.14%	0.04%	-0.35%	-0.63%	-0.73%	-0.88%	-0.65%

Percentage movements between the major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. For instance, choosing the British Pound on the left and following that row across to the US Dollar gives the percentage change for GBP (base)/USD (quote) in the corresponding cell.