British Pound climbs above 1.3400 as Oil rout outshines strong US PMI

• GBP/USD gains 0.26% to 1.3423 as US Dollar weakness supports Sterling.
• WTI plunges over 5.60% despite stronger US manufacturing activity.
• BoE expected to raise rates to 4% as traders await NFP.

The Pound Sterling (GBP) rises about 0.26% against the US Dollar (USD) on Monday, starting the eleventh month of the year on an upbeat note as the economy in the US remains strong following the release of the ISM Manufacturing PMI for October. GBP/USD trades at 1.3423 at the time of writing after hitting a six-week high of 1.3448.

GBP/USD advances as plunging Oil prices weaken the Dollar ahead of BoE decision

The Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) improved from 54.5 to 55.5 in October, exceeding forecasts of 54.6. In the report, employment measurements cooled by a tenth, while Prices Paid dipped from 77.9 to 75.2.

The data was US dollar-positive, but renewed hopes for a diplomatic exit to the US-Iran conflict sent energy prices downwards, with West Texas Intermediate (WTI), the US Oil benchmark, falling more than 5% to $96.32. Consequently, the positive correlation between crude and the Greenback weighed on the latter, with the US Dollar Index (DXY), which tracks the value of the American currency against six other currencies, drifting lower by 0.27% to 101.68.

US Secretary of State Marco Rubio said that US President Donald Trump supports a diplomatic exit. Ahead, US mid-term elections would drive price action before investors focus on Friday’s Nonfarm Payrolls report.

In the UK, traders have digested the Autumn Budget and now brace for the Bank of England (BoE) monetary policy decision on Thursday.

The BoE is widely expected to raise rates by 25 basis points to 4% by the end of the year; money markets had priced a total of 33 bps of hikes, according to Prime Terminal.

This is Pound positive as the interest rate differential between the US and the UK will narrow. But if the BoE holds rates steady in December and the Fed raises rates as priced by market participants, this could cap the GBP/USD advance.

What’s in the calendar?

In the UK, the docket is absent. In the US, traders will eye Factory Orders and the Job Openings and Labor Turnover Survey (JOLTS).

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3418, retaining a bullish near-term bias as it holds above the latest composite simple moving average cluster around 1.3376. The pair is also trading above former trend-line barriers, with the broken downward resistance from 1.3653 now providing support near 1.3387 and the earlier resistance line tied to the 1.3869 peak now underpinning price around 1.3244. A Relative Strength Index (14) reading near 59 suggests constructive but not overextended bullish momentum, reinforcing the idea of buyers remaining in control while upside remains gradually paced.

On the downside, immediate support is seen at the current price area around 1.3418, ahead of the trend-line support-turned-floor at 1.3387 and the simple moving average cluster near 1.3376, with a deeper cushion at the prior break zone around 1.3244. On the topside, GBP/USD would face next notable resistance at the rising support trend line broken near 1.3668, with a stronger cap emerging at the higher upward trend-line break around 1.3842, where sellers could attempt to reassert themselves.

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