The Pound to Euro exchange rate could see further gains in the coming days as positive momentum continues to build. Despite a one percent rise in September, the Pound faces significant resistance at the 1.2022 level, which was last week's peak. If momentum remains strong, there is potential for the Pound to move towards 1.2099 in the near term, though a pullback could occur before reaching this level. Similarly, GBP/USD faces substantial resistance at 1.34, a threshold that will require a significant event or economic shift for the pair to break and sustain support above.
The 1.20-1.21 range remains critical for the Pound, as it hasn’t been sustained above these levels since 2016. Technical indicators are supportive of further gains, with the Relative Strength Index (RSI) at 65 and trending higher. However, a move beyond this range would require a significant divergence between Eurozone and UK economic conditions. Without such a divergence, there’s a risk that the Pound’s rally could stall or enter a period of consolidation. Similarly, for GBP/USD to overcome 1.34 resistance, a strong catalyst—such as a major central bank decision or shift in U.S. economic data—would be necessary.
Upcoming Eurozone inflation data could increase the likelihood of another European Central Bank rate cut. Meanwhile, U.S. data will play a critical role in shaping global risk sentiment and influencing the Pound’s movements. Markets will be watching U.S. PMI data and Federal Reserve speeches closely, as these could signal future U.S. interest rate policy. A weaker-than-expected non-farm payroll report on Friday would likely boost expectations for further Fed rate cuts, which could support the Pound. However, stronger data could dampen sentiment, limiting the Pound’s upside and keeping GBP/USD below the 1.34 resistance.
