British Pound holds its ground as US Consumer Sentiment deteriorates

• GBP/USD trades near 1.3231 as the Dollar edges higher.
• US Consumer Sentiment Index drops to 46.3 in October.
• One-year inflation expectations rise to 4.7%, reinforcing Fed concerns.

The Pound Sterling holds firm against the US Dollar, which has so far posted modest gains against a basket of six currencies, while US consumers grew pessimistic about the economy as the US-Iran conflict dragged on for another week. The GBP/USD trades at 1.3231 at the time of writing.

Sterling steadies despite high US Treasury yields; inflation expectations climb across US households

The US Dollar Index (DXY), which measures the performance of the US dollar against its peers, is up 0.16% to 102.27.

Data from the University of Michigan showed the Consumer Sentiment Index in October diving from 48.1 in September to 46.3, missing forecasts of 46.3. The report showed that the economy’s trajectory has weakened since the start of 2026. US households upwardly revised inflation expectations for one year to 4.7% from 4.6%, and for a five-year period to 3.5% from 3.4%.

Market participants' attention shifts to the release of US inflation in the consumer and producer sectors. Also, Retail Sales, further jobs data, and Fed speakers could dictate the path of interest rates as the October FOMC meeting looms.

Fed interest rate expectations remain unchanged for October, with investors seeing a 81% chance of keeping rates unchanged. For the December meeting, they expect 21 basis points of tightening, with the odds for an increase being at 87%, revealed Prime Terminal.

In the meantime, US Treasury yields continue to rise, indicating that investors continue to price a higher premium due to expectations of higher living costs.

In the UK, eyes are on high energy prices, and investors are bracing for the release of Chancellor John Healey’s Autumn Budget.

The schedule will feature UK Retail Sales, a speech by the BoE Chief Economist Pill and the release of GDP figures.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3229, keeping a bearish near‑term tone as spot remains decisively below the cluster of longer‑term simple moving averages around 1.3439 and a series of former rising trend‑line supports now acting as overhead barriers near 1.3360 and above. The Relative Strength Index (14) at 38.47 stays on the soft side of neutral, which hints at lingering downside pressure while falling short of oversold extremes, suggesting sellers retain control unless price can reclaim the mentioned structural caps.

On the topside, initial resistance is located at the broken upward trend line coming in around 1.3360, followed by the grouped 50/100/200‑day simple moving averages near 1.3439, which reinforce the broader bearish bias. Above there, a prior descending resistance line caps the market around 1.3508, with another downtrend barrier near 1.3544 and a higher former support trend line turned resistance around 1.3606, levels that would need to be cleared to alleviate the current downside pressure; with no nearby supports mapped below spot from this dataset, any fresh lows would leave the pair exposed to further bearish extension until a new base is formed.

(The technical analysis of this story was written with the help of an AI tool. Know more.)