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22.10.202604:32 Forex Analysis & Reviews: Overview of the GBP/USD pair. October 22. Andrew Bailey and Company Are Ready to Tighten

Relevancia 02:00 2026-10-23 UTC+00

Exchange Rates 22.10.2026 analysis

The GBP/USD currency pair traded fairly calmly on Wednesday but still continued its upward move during the day. For the second day in a row, UK data supported sterling that the market had previously ignored. However, once the market started paying attention, it became clear there are plenty of reasons for the pound to gain against the US dollar. Start with the UK unemployment report. In August, it fell to 4.7%, which no one on the market expected. Of course, there's a fly in the ointment, but why? The report clearly shows the UK economy is improving. Maybe it is far from perfect, but what economy in the world can currently boast high results?

Yesterday the UK inflation report for September was published. Both key measures (core and headline inflation) rose more than forecast. In particular, the headline consumer price index accelerated to 3.5% versus forecasts of 3.4%. What does this mean? Only that there are fewer and fewer grounds for the Bank of England to "remain on hold." Basically, the market understands that the BoE will be forced to tighten monetary policy. That was clear already in the summer. The question was only about timing. And the latest remarks by BoE Governor Andrew Bailey showed that the central bank could begin tightening as early as the next meeting.

In essence, Bailey openly stated that holding rates at current levels is becoming increasingly difficult. The Bank of England chief also said the central bank cannot afford to wait for full data on how high energy prices affect the structure of inflation and how they will manifest in the future. His first deputy, Sarah Breeden, supported him. She said rate hikes are becoming more appropriate and that central bank officials should not delay starting tightening, because secondary signs of inflation becoming entrenched in the economy could appear. Then beating inflation will be much harder.

It remains to be recalled that at recent meetings at least three members of the BoE's Monetary Policy Committee voted for a rate increase. Therefore, two more votes are required to adopt a positive decision. Yesterday, inflation rose from 3.1% to 3.5%, so we believe two additional "hawkish" votes will follow.

Since the market could hardly have priced in a BoE rate hike in advance (it was too busy with Federal Reserve policy), the British currency may well continue to rise. On the daily timeframe, the price bounced off the lower boundary of a sideways channel visible to the naked eye. Therefore, one can now expect a move toward the upper boundary of the channel — the 1.3650 level. From there, a resumption of the 2022 uptrend is not far off.

Exchange Rates 22.10.2026 analysis

The average volatility of the GBP/USD pair over the last 5 trading days is 79 pips. For the pound/dollar pair, this value is characterized as "average." On Thursday, October 22, we therefore expect movement inside a range bounded by 1.3308 and 1.3466. The higher linear-regression channel is turning down again. The CCI entered the oversold area twice and formed a bullish divergence, warning of a possible end to the downtrend.

Nearest support levels:

S1 – 1.3367

S2 – 1.3306

S3 – 1.3245

Nearest resistance levels:

R1 – 1.3428

R2 – 1.3489

R3 – 1.3550

Trading recommendations:

The GBP/USD currency pair has begun an upward trend that could become the start of a long-term move. Donald Trump's policies will continue to pressure the U.S. economy, so we do not expect long-term strength from the American currency. So far, 2026 has been positive for the dollar because geopolitics and inflation have forced capital to seek safety and the Fed to return to tightening monetary policy. However, on the weekly TF, price remains flat between 1.3150 and 1.3780 within a four-year uptrend, supporting expectations for sterling's medium-term rise. Consider long positions with targets of 1.3428 and 1.3466 while the price is above the moving average. If price is below the moving average, you can trade the downside with targets of 1.3245 and 1.3184.

Explanations for the illustrations:

  • Linear regression channels help determine the current trend. If both are directed the same way, the trend is currently strong.
  • The moving average line (settings 20,0, smoothed) defines the short-term tendency and the direction in which trading should be conducted now.
  • Murray levels are target levels for moves and corrections.
  • Volatility levels (red lines) show the likely price channel the pair will trade in over the next 24 hours, based on current volatility indicators.
  • The CCI indicator — entering the oversold area (below -250) or the overbought area (above +250) — signals an imminent trend reversal in the opposite direction.

*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.

Paolo Greco,
Analytical expert of InstaSpot
© 2007-2026
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