FX.co ★ Overview of the GBP/USD Pair. October 26. The Fed Meeting as the Main Driver for the Dollar

The GBP/USD currency pair also showed no interesting moves on Friday, and the market once again showed that the macroeconomic backdrop isn't its top priority right now. The UK PMI and retail-sales report were digested but did not change the overall technical picture. Sterling staged a decent correction over the past week and a half, but the key question is whether the pound can do more.

We continue to insist that the technical picture is paramount for sterling at the moment. On the daily and weekly timeframes, sideways channels remain in place; price has worked off the lower boundaries, formed a deviation, and pushed upward. Therefore, we are likely to see a rise at least to the upper boundary of the daily channel—around 1.3650. We also believe the pound could gain another 300 pips without any news support; if positive news appears, it will only make reaching the target easier. In the bigger picture, the uptrend remains intact, so clearing 1.3650 would open the path toward 1.4000 for GBP/USD.

This week the Federal Reserve meets in the United States, and the key rate is about 95% likely to remain unchanged. But can the pound keep rising given the Bank of England's likely tightening a week later? In our view, the market has not fully moved away from the "buy the dollar" mindset. The market can interpret any remark by Kevin Warsh as dollar-bullish or hawkish.

Remember, a new Fed chair never speaks directly about future policy moves or the policy trajectory, so the market usually invents how the central bank will act and trades on those assumptions. So the dollar could strengthen on Wednesday and Thursday even if the Fed meeting is uneventful.

We also believe any dollar rise would be just another correction. As long as the price stays within the two sideways channels on the daily and weekly timeframes, we expect sterling to keep rising—regardless of fundamental, geopolitical, or macroeconomic noise. Also note that the market likely hasn't priced in even a single BoE rate hike yet, and there could be three or more. UK inflation is rising briskly, and a possible resumption of conflict in the Middle East immediately after the U.S. midterms is another reason oil and other energy prices may keep climbing —especially with winter approaching.

The average volatility of the GBP/USD pair over the last 5 trading days is 61 pips. For the pound/dollar pair, this value is characterized as "average." On Monday, October 26, we therefore expect movement inside a range bounded by 1.3314 and 1.3436. The higher linear-regression channel is turning down again. The CCI entered the oversold area twice and formed a bullish divergence, warning of the end of the downtrend.

Nearest support levels:

S1 – 1.3367

S2 – 1.3306

S3 – 1.3245

Nearest resistance levels:

R1 – 1.3428

R2 – 1.3489

R3 – 1.3550

Trading recommendations:

The GBP/USD currency pair has begun an uptrend that could become the start of a long-term move. Donald Trump's policies will continue to pressure the U.S. economy, so we do not expect long-term strength from the American currency. So far, 2026 has been positive for the dollar due to geopolitics and inflation, which forced capital to seek safety and the Fed to return to tightening. However, on the weekly TF, price remains flat between 1.3150 and 1.3780 within a four-year uptrend, supporting expectations for sterling's medium-term rise. Consider long positions with targets of 1.3428 and 1.3436 while the price is above the moving average. If price is below the moving average, you can trade the downside with targets of 1.3314 and 1.3306.

Explanations for the illustrations:

• Linear regression channels help determine the current trend. If both are directed the same way, the trend is currently strong.
• The moving average line (settings 20,0, smoothed) defines the short-term tendency and the direction in which trading should be conducted now.
• Murray levels are target levels for moves and corrections.
• Volatility levels (red lines) show the likely price channel the pair will trade in over the next 24 hours, based on current volatility indicators.
• The CCI indicator — entering the oversold area (below -250) or the overbought area (above +250) — signals an imminent trend reversal in the opposite direction.