GBP/USD has been one of the most bearish pairs this year until the end of September. September in particular was a strong bearish month, as UK guilt yields kept surging, but the situation improved after the Bank of England intervened in the bond market and stabilized the markets.

As a result, the GBP reversed higher while the USD reversed lower as the FED started giving less hawkish signals. This pair reversed from below 1.04 and has climbed nearly 20 cents after closing last week at 1.23. the last moving average which was the 200 SMA (gray) was broken to the upside and it turned into support immediately after the 150 pip dip on Friday after the positive US employment report. Although the other half of the coin is not looking great either, as the UK heads into a contraction. The CBI was out last night with some

GBP/USD Daily Chart – The 200 SMA Has Turned Into Support

All moving averages have been broken on the daily timeframe

A Grim Reading from the UK’s Confederation of British Industry (CBI)

• Forecasts GDP to contract 0.4% in 2023
• Unemployment to peak at 5.0% in late 2023 and early 2024, up from 3.6% currently
• “Britain is in stagflation – with rocketing inflation, negative growth, falling productivity and business investment. Firms see potential growth opportunities but … headwinds are causing them to pause investing in 2023”
• “We will see a lost decade of growth if action isn’t taken. GDP is a simple multiplier of two factors: people and their productivity. But we don’t have people we need, nor the productivity”

GBP/USD Live Chart