GBP/USD Extends Recovery for a Second Day, Reviving Bullish Momentum

Cable surged to its highest level in more than three weeks on Friday, extending a sharp recovery after a series of failed attempts to break lower, including Thursday’s brief dip to 1.3136, the weakest level since 26 November 2025.

The pair gained around 1.3% over the past two sessions, supported by broad-based dollar weakness that triggered profit-taking from the 1.3675/1.3136 downtrend. Sterling also drew support from expectations that UK inflation accelerated in September, with data due next Wednesday, reinforcing market bets that the Bank of England could raise interest rates at its 5 November policy meeting.

The latest rally has materially improved the daily technical outlook. The 14-day momentum indicator has turned positive, while the converging 10- and 20-day moving averages, now positioned below the market, are on the verge of forming a bullish crossover.

Thursday’s bullish engulfing candle further strengthens the constructive setup, signaling a potential trend reversal on the daily chart. The two-day advance has already retraced more than 38.2% of the 1.3675/1.3168 decline, with a close above this retracement level expected to validate the recovery signal.

The pair is also on track for a solid weekly gain following a two-week decline and a subsequent two-week consolidation phase, developments that add weight to the emerging reversal pattern.

Bulls are now targeting 1.3389, where the 100-day moving average offers initial resistance, ahead of 1.3406, the 50% retracement of the recent decline. A break higher would expose the 200-day moving average at 1.3431 and the daily Ichimoku cloud base at 1.3447.

Res: 1.3389; 1.3406; 1.3431; 1.3447
Sup: 1.3342; 1.3310; 1.3273; 1.3250