07.11.202504:37 Forex Analysis & Reviews: Overview of the GBP/USD Pair. November 7. The Bank of England Provided Another Opportunity for the Market

The GBP/USD currency pair traded very weakly on Thursday, despite the Bank of England meeting, which could have prompted movement in the currency market. As we warned, the British central bank did not lower the key rate. The reason is obvious—high inflation. However, if one can put it this way, the BoE was on the verge of making a positive decision, which we did not expect.

Let's briefly recap the background. Inflation in the UK reached 3.8% two months ago. It's easy to see that this level is twice as high as inflation a year ago and almost twice the BoE's target. Thus, logically, the BoE could not decide to lower the key rate. How could the market react? Since maintaining the rate is a "neutral" decision, and the British pound has only been declining for the past month and a half, this information could have supported it. However, much depended on the Monetary Policy Committee's voting results on the rate. Predictions indicated three "dovish" votes and six "neutral." In practice, there were actually four "dovish" votes. One more vote, and the rate would have been lowered.

Thus, the BoE meeting's results can be considered more "dovish" than anticipated. But what difference does it make how many officials voted for a reduction if the rate ultimately remained unchanged, and the British pound has been falling for a month and a half even without the "dovish" outcomes of the vote? The bears did not need support from the central bank.

In essence, the British pound could have continued to decline on Thursday, but it did not. It did not do so for the second consecutive day. On Wednesday, the U.S. released figures for the ISM services index and the ADP employment report, which showed higher-than-forecast values. This information was ignored amid a steadily rising dollar. On Thursday, the BoE meeting could have triggered a decline in the pair, but that information was also overlooked.

Despite the British pound leaving the side channel, and it can now be considered that a downward trend has begun on the daily timeframe, we still do not believe in the pair's decline. The dollar has no reason for growth. Consequently, we view almost any decline in GBP/USD as completely illogical. Particularly after the pair had already fallen by 700 pips, for which there were absolutely no grounds.

What's next? We still expect growth. We are physically and mentally unwilling to advise traders on sales, as the fundamental and macroeconomic backdrop remains unfavorable for the dollar. We believe that the recent decline in the pair is a manipulation to confuse retail traders into believing in a downward trend.

The average volatility of the GBP/USD pair over the last five trading days is 73 pips. For the pound/dollar pair, this value is considered "average." On Friday, November 7, we expect movement within the range limited by the levels of 1.3043 and 1.3189. The upper channel of the linear regression is downward-sloping but is currently in a technical correction on the higher timeframes. The CCI indicator has entered the oversold zone four times, signaling a resumption of the upward trend. Additionally, a bullish divergence has formed.

Nearest support levels:

S1 – 1.3184

S2 – 1.2939

S3 – 1.2817

Nearest resistance levels:

R1 – 1.3306

R2 – 1.3428

R3 – 1.3550

Trade Recommendations:

The GBP/USD currency pair is trying to resume the upward trend of 2025, and its long-term prospects remain unchanged. Donald Trump's policies will continue to exert pressure on the dollar, so we do not expect the American currency to appreciate. Currently, a flat persists on the daily timeframe. Therefore, long positions with targets of 1.3672 and 1.3733 remain much more relevant as long as the price is above the moving average. When the price is below the moving average line, small shorts can be considered with targets at 1.3043 and 1.2939 on technical grounds. At times, the American currency shows corrections (on a global scale), but for a trend to strengthen, it needs real signs of a conclusion to the trade war or other global positive factors.

Explanations for Illustrations:

• Linear regression channels help determine the current trend. If both are directed in the same way, it indicates that the trend is currently strong.
• The moving average line (settings 20,0, smoothed) defines the short-term trend and the direction in which trading should currently be conducted.
• Murray levels are target levels for movements and corrections.
• Volatility levels (red lines) represent the likely price channel in which the pair will spend the following days, based on current volatility indicators.
• The CCI indicator entering the oversold territory (below -250) or overbought territory (above +250) indicates that a trend reversal in the opposite direction is approaching.