GBP/USD Faces Bearish Consolidation Below 100-Dollar Threshold

The US Dollar remains strong and is overcoming most other currencies, including the British Pound. This week's market environment is expected to be dominated by technical factors and speculators hoping for a sustained bullish breakout of the US Dollar Index (DXY) above 100.

Adam Lemon, Chief Analyst at DailyForex, notes that the GBP/USD currency pair will be in focus this week despite the dominance of Forex action by the Japanese Yen over the past couple of weeks. The British Pound is not a relatively weak currency, but its outlook is comparatively weaker against the Dollar.

The Fed's recent rate hike and indication that further tightening may be necessary have lifted the Dollar Index to around 100.4, close to a seven-week high. Markets price a 58% probability of another 0.25% hike in October and an approximately 90% chance of at least one further increase by December.

The GBP/USD technical analysis shows that the price action has been making a range between 1.3650 and 1.3100 for more than the past year. Currently, it's showing a bearish consolidation chart pattern with a compression just below resistance at 1.3406.