GBP/USD Trades with positive bias above mid-1.3300s, around 38.2% Fibo. level

• GBP/USD attracts buyers for the second straight day amid subdued USD demand.
• The divergent Fed-BoE policy expectations remain supportive of the positive move.
• The mixed technical setup warrants some caution before placing fresh bullish bets.

The GBP/USD pair gains some positive traction for the second consecutive day on Monday as dovish Federal Reserve (Fed) bets, and the risk-on impulse keep the safe-haven US Dollar (USD) depressed. Spot prices trade just above mid-1.3300s during the Asian session and look to build on Friday’s goodish rebound from the 1.3260 area, or the lowest level since August 5.

The global risk sentiment gets a strong boost after US President Donald Trump backtracked on his threatened 100% tariffs on Chinese imports from November 1. This comes on top of expectations that the US central bank will lower borrowing costs two more times this year and concerns about a prolonged US government shutdown, which undermines the safe-haven buck. Furthermore, bets that the Bank of England (BoE) will keep interest rates on hold for the rest of this year benefit the British Pound and act as a tailwind for the GBP/USD pair.

From a technical perspective, Friday’s breakout through the 23.6% Fibonacci retracement level of the monthly downfall backs the case for additional intraday gains. However, negative oscillators on 4-hour/daily charts make it prudent to wait for some follow-through strength beyond the 38.2% Fibo. retracement level, before placing fresh bullish bets. The GBP/USD pair might then surpass the 1.3400 round figure and climb further towards the 1.3420-1.3425 confluence support –  the 200-hour Simple Moving Average (SMA) and the 61.8% Fibo. retracement level.

On the flip side, the 1.3330-1.3325 region (23.6% Fibo.) now seems to protect the immediate downside ahead of the 1.3300 mark and the multi-month low, around the 1.3260 area touched on Friday. The subsequent fall should pave the way for an extension of a nearly one-month-old downtrend from the 1.3725 zone, or over a two-month peak touched in September, towards the 1.3200 round figure. The latter is closely followed by the very important 200-day SMA, around the 1.3180-1.3175 region, which, if broken decisively, will be seen as a fresh trigger for bearish traders.

GBP/USD 1-hour chart