The pound against the dollar is expected to rise for three consecutive times, or break through the resistance of the 10-day moving average

On Monday (October 4), the pound against the US dollar attracted some bargain hunting near 1.3530, and continued the rebound from near 1.3410 (the lowest level since December 2020) last week. It is expected to break through the 10-day moving average resistance in the day. This marked the third consecutive day of positive movements in the British pound against the U.S. dollar. The only supporting factor was the continued weakness of the U.S. dollar.


In fact, the key U.S. dollar index has fallen further from the one-year high it hit last Thursday and provided some support for the pound to the dollar. Even so, a series of factors should help limit further declines in the U.S. dollar and limit the sharp upward movement of the pound against the U.S. dollar, giving active bullish investors reason to be cautious.

Investors seem to be convinced that the Fed will begin to reduce its stimulus measures during the pandemic period as early as November. The market seems to have also begun to expect the Fed to raise interest rates in 2022. This, coupled with the good recovery of US Treasury yields, should boost the dollar.

In addition, the hedging impulse should also provide some support for the safe-haven dollar. Concerns about the Evergrande crisis have reduced investors' interest in high-risk assets. This can be seen from the general weakness in the stock market.

On the other hand, the ongoing fuel crisis in the UK should prevent traders from making aggressive bullish bets on the pound. In addition, the tension between the United Kingdom and France over the issue of fishing rights after Brexit may further limit the exchange rate of the pound to the dollar.

Therefore, it is prudent to wait for a wave of strong follow-up buying before confirming that the GBP/USD has recently bottomed and adjusting positions for further gains. Neither the United Kingdom nor the United States has any major economic data that will affect market trends to be released on Monday, which makes the British pound against the U.S. dollar affected by the price dynamics of the U.S. dollar.

The initial resistance above focuses on the low of 1.3641 on September 20, and further resistance focuses on the 20-day moving average at 1.3694 and the 50-day moving average at 1.3767.

The initial support below focuses on the monthly low of 1.3572 on the 20th, and further attention on the 5-day moving average of 1.3517 and the September 29 low of 1.3412.

(The British pound against the U.S. dollar daily chart)

At GMT+8 21:09, the pound was quoted at 1.3600 against the US dollar.