Ella 
The GBP/USD saw fresh buying on the first day of the new week, and maintained its intraday gains in early European trading. The spot price is currently trading in the 1.2175-1.2180 range, with an intraday gain of 0.30%. The pair appears to have snapped its two-day losing streak and has fallen back to its one-week low reached last Friday.
The U.S. Dollar (USD) started the new week weaker due to uncertainty about the Federal Reserve’s (Fed) future path of interest rate hikes, which became a key factor supporting the GBP/USD. Recent dovish comments from several Fed officials suggest that the central bank will keep interest rates on hold for a second consecutive meeting in November. This, along with a generally positive tone in equity markets, weakened the safe-haven dollar.
However, the latest U.S. consumer inflation data released last week has renewed market bets that the Federal Reserve will raise interest rates again this year. This remains a supportive factor for rising US Treasury yields. In addition, the risk that Israel’s conflict with Hamas could lead to a wider conflict in the Middle East could also help limit the dollar’s downside. In addition, expectations that the Bank of England (BOE) will maintain the status quo in November have also prevented the bulls from placing new bets.
The Bank of England unexpectedly paused its rate hike cycle in September and has given little indication of its intention to raise rates. Therefore, it would be prudent to wait for strong follow-through buying before confirming that the pair’s recent corrective pullback from around 1.2300, last Wednesday’s monthly high, is over. There was no relevant UK macro data released on Monday, while the only US economic data was the Empire State Manufacturing Index.
