British Pound catches bid as Fed’s Waller eyes a pause in October

The Pound Sterling (GBP) advances about 0.14% on Thursday as the US Dollar (USD) weakens despite positive US jobs data, but dovish comments by Federal Reserve (Fed) Governor Christopher Waller weighed on the Greenback. At the time of writing, GBP/USD trades at 1.3230 after bottoming at 1.3184.

Sterling rebounds as softer Fed expectations offset solid US jobless claims data

The US Department of Labor reported that Initial Jobless Claims for the week ending October 3 came in at 197K, below forecasts of 200K and down from the previous week's upward-revised print of 199K. An analyst cited by Reuters said that “It's still a 'low-hire, low-fire' job market,” which is good for people who already have a job, but tough for someone looking to enter the workforce.

Recently, Fed Governor Waller said rate hikes need not occur at consecutive meetings, hinting that the central bank may pause in October. However, he said more hikes are likely needed to curb inflation, but there’s flexibility over the pace of tightening.

On Wednesday, the latest Fed minutes revealed that all members backed September’s rate hike and that the board sees the labor market as “stable and generally viewed … as close to maximum employment.”

Given the backdrop, money markets have priced out a potential rate hike by the Fed in October, with the odds at a minimal 18%, while for December they remain at 87%, according to Prime Terminal.

In the UK, Bank of England (BoE) Governor Andrew Bailey stated that monetary policy must remain focused on inflation in a speech at a conference in Turkey on Thursday. Bailey added that governments need to double down on fixing fiscal deficits and that it must be “credible and directed at stability.”

BoE interest rate probabilities show an 83% chance of a 25-basis-point rate hike by the central bank, which would push the Bank Rate to 4%. For the December meeting, the odds are 92%, according to Prime Terminal.

Therefore, if the Fed and the BoE finish the year raising rates twice, the interest rate differential would remain flat, which could increase the appeal for Sterling, which has weakened on US Dollar strength and fears of a fiscal disaster.

Ahead, the US economic docket will feature the University of Michigan Consumer Sentiment. In the UK, the docket is absent.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3212, extending its slide below a dense band of former supports that have turned into resistance, keeping the near-term bias bearish. The latest reading of the 50/100/200-day simple moving averages (SMA) cluster around 1.3443, now well above spot and reinforcing the idea of a market capped by medium-term trend resistance. Momentum is weak, with the 14-day Relative Strength Index hovering near 36, which hints at persistent selling pressure but not yet extreme oversold conditions, while the latest FXS Fed Sentiment Index print at 137.91 suggests a still-firm dollar backdrop weighing on the pair.

On the topside, initial resistance emerges at the former trend-line break near 1.3300, followed by the downward-sloping resistance trend line breaking around 1.3425 and the SMA cluster at roughly 1.3443. Above there, a reclaimed move toward 1.3568 and 1.3764—both prior rising-support break levels—would be needed to undermine the current bearish structure. With no meaningful technical support immediately below the market and price pressing its recent lows, the pair remains vulnerable to further downside until buyers can force a sustained recovery above the 1.3300 area.