The pound failed to hold yesterday's bounce and is again under pressure from the dollar. GBP/USD is trading around 1.3232 after rising to 1.3273 yesterday. The last 24-hour low is at 1.3221, and overnight the price barely moved, holding in a range from 1.3226 to 1.3241.

The loudest remarks yesterday came from Mary Daly, and they mark a real turning point. Previously, she thought Federal Reserve policy was well positioned; now she says further tightening will be required. According to her, price pressures have spread beyond sectors tied to tariffs and oil, and firms are increasingly passing costs on to consumers. John Williams also confirmed a hawkish stance, saying inflation is too high even in the latest data and that, over time, action will be needed to bring it back to 2% in a timely and durable way. These comments were reinforced by yesterday's decent US labor-market data, which showed resilience.

There are no UK releases today, and without domestic drivers, the pound remains at the mercy of the dollar. Yesterday's GDP figures did not help: the UK economy grew 0.7% q/q in Q3 versus 0.5% previously, 1.9% y/y versus 1.4%, and September GDP rose 0.2% versus a 0.0% forecast. Industrial production added 0.3% month-on-month (vs -0.3% expected), and manufacturing rose 0.7% instead of the expected -0.5%. But even strong GDP figures did not stop the pound's decline because the market is focused on Fed rate expectations. In my view, without new UK data, sterling will continue to follow the dollar, and the weakness may persist.

Momentum

The price is now at 1.3232, inside a range between 1.3214 and 1.3245. A move beyond the boundary is a breakout, but one touch isn't enough—confirmation is needed, meaning several consecutive five-minute candles must close beyond the level. Otherwise, you can easily get caught by a false breakout, after which price returns.

From above 1.3245 is active. A close above it opens the way to 1.3275 and then to 1.3301. Overnight, the price rose only to 1.3241 — so it nearly reached the level but failed to break it, and this is a tested ceiling. The first target, 1.3275, coincides with the top of yesterday's bounce, so selling often appears there. There is no catalyst for such a jump today, so I have little confidence in that scenario.

Below the reference is 1.3214; a close below it leads to 1.3183, then to 1.3161. I consider this direction primary. The backdrop for the dollar remains strong — the Fed added hawkishness yesterday — and the pound has no own drivers. It's about eighteen pips to the level, and yesterday's low at 1.3221 must be passed first. If the price does that and closes below, the decline could be rapid. I would not enter on the first touch.

Mean Reversion

There are two levels here, 1.3245 and 1.3219. The upper reference 1.3245 coincides with the breakout point for long positions at 1.3245, and special caution is required. The same price serves both as a signal for upside and as the mark for a reversal downward, and you cannot tell which scenario has activated on the first touch. If the price closes above 1.3245, the upside breakout is in play and selling there is not allowed. If it reaches 1.3245, finds no continuation, and quickly returns below, I consider selling with a stop above 1.3251 with a small buffer. The difference between the two scenarios may take several minutes to reveal itself, so it's better to skip the initial reaction in the zone.

The lower reference 1.3219 sits five pips above the breakout point 1.3214 and almost coincides with yesterday's low at 1.3221. That means buyers appeared here once already. The scheme is this: price falls to 1.3219, fails to hold below, and returns higher; then I look to buy with a stop below 1.3214, with a buffer. Such a rebound is most likely if no new hawkish Fed remarks appear and the market starts taking profits at week's end. If price closes confidently below 1.3214, the reversion is canceled, and the downward breakout plays.