GBP/USD Price Forecast: Can a Decisive Break Above 1.3420 Unlock a Fresh Leg Higher?

GBP/USD turns flat near 1.3373, giving up its initial gains as the US Dollar stages a modest recovery.
Wednesday’s Fed decision is expected to keep interest rates unchanged.
A tightening of monetary policy by the BoE next week is anticipated by investors.

Early gains in the British Pound (GBP) fade during Monday’s European trading session, leaving it broadly unchanged against the US Dollar (USD) at around 1.3373. A partial recovery in the US Dollar from its earlier losses brings GBP/USD back to flat levels.

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

At the time of writing, a marginal decline leaves the US Dollar Index (DXY) near 101.70. The index measures the Greenback against a basket of six major currencies.

Wednesday’s monetary policy announcement from the Federal Reserve (Fed) will be a key focus for investors this week. According to the CME FedWatch tool, rates are almost certain to remain within the 3.75%-4.00% range. The same tool indicates that the United States (US) central bank will increase rates at its December meeting.

Beyond the Fed decision, Thursday’s releases of preliminary Q3 Gross Domestic Product (GDP) and September’s Personal Consumption Expenditure (PCE) Price Index will draw investor attention. Expectations point to annualised US economic growth of 3.2%, compared with 2.2% in the previous reading.

For GBP, next week’s monetary policy announcement by the Bank of England (BoE) is set to be the key trigger. A 25 basis points (bps) rate increase to 4% is widely expected from the BoE.

GBP/USD Technical Analysis: Can the Recovery Extend?

With GBP/USD trading at 1.3370 on the daily chart, the near-term outlook remains mildly positive as buyers protect the recent recovery. The pair is above its 20-day exponential moving average (EMA) of 1.3323. At 54.8, the Relative Strength Index (RSI) lies in neutral-to-positive territory, suggesting supportive momentum that has not yet entered overbought territory.

The 20-day EMA, near 1.3323, provides the first support on the downside. A breach would likely weaken the bullish bias and leave the pair vulnerable to a deeper pullback. On the upside, the previous week’s high near 1.3420 presents the first barrier. A clear move above it would create scope for additional gains towards 1.3500.

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

Economic Data in Focus

What Does the Fed Interest Rate Decision Mean?

At eight scheduled meetings each year, the Federal Reserve (Fed) reviews monetary policy and decides on interest rates. Its dual mandate is to maintain full employment and keep inflation at 2%. The principal means of meeting these objectives is to set the rates at which it lends to banks and at which banks lend to one another. A rate increase generally supports the US Dollar (USD) by drawing in more foreign capital. Conversely, a rate cut tends to weigh on the USD as capital moves to countries offering higher returns. When rates remain unchanged, the focus shifts to the Federal Open Market Committee (FOMC) statement: whether its tone is hawkish, signalling expectations of higher future interest rates, or dovish, signalling expectations of lower future rates.

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Upcoming release: Wed 28 Oct 2026 18:00

Release frequency: No fixed schedule

Consensus estimate: 4%

Previous reading: 4%

Data source: Federal Reserve