After three consecutive days of decline, the British pound rebounded slightly against the US dollar to around 1.3310. The cautious policy tone of the Bank of England became an important force supporting the British pound.

"Monetary policy must remain tight for longer to create a supportive environment for economic growth," Bank of England policymaker Catherine Mann said on Thursday, adding that "inflation remains stubbornly stubborn and the growth outlook remains weak."

Meanwhile, the UK Treasury continues to maintain fiscal discipline. In a letter to government agencies , Chief Secretary to the Treasury James Murray stressed that the government will prohibit departments from using emergency funds to increase salaries to prevent a wage spiral.

He said: "This cautious but strict fiscal approach will help build a stable economy." Although the British policy tone supports the pound, the continued US government shutdown has increased risk aversion, thereby supporting the status of the US dollar.

The U.S. Senate remains deadlocked in a budget impasse and has failed to pass legislation to end the shutdown. Rising safe-haven demand has led some investors to reallocate to U.S. dollar assets, limiting further gains for the pound.

On the other hand, the Federal Reserve's dovish outlook could somewhat weaken the dollar's gains. San Francisco Fed President Mary Daly said that "inflation is already well below the level of previous concerns," and pointed out that the central bank expects more interest rate cuts in the future to address risks.

Federal Reserve Vice Chairman Michael Barr said the current economic outlook complicates the path of monetary policy. He emphasized that the September rate cut was appropriate, and the current policy rate remains somewhat restrictive. However, he acknowledged that it is difficult to determine the full impact of the government shutdown on the economy.

From the daily chart, GBP/USD found support around 1.3300 after three consecutive days of decline and rebounded slightly. The short-term moving average system showed a bullish flattening state, indicating that the upward momentum has temporarily slowed down but there is still potential.

The daily RSI has rebounded from oversold territory to above neutral, suggesting a short-term correction but not yet a complete stabilization. If the exchange rate holds support at 1.3300, short-term targets could be 1.3350–1.3380. If it falls below 1.3280, a pullback to 1.3250 could be in order.

Overall, the technical structure of the daily line is slightly neutral, and there is still a possibility of further rebound after short-term adjustments.

Editor's opinion:

The current GBP/USD trend reflects a fragile balance in policy negotiations. On the one hand, the Bank of England's continued tightening stance is supporting GBP's fundamentals; on the other hand, the risk aversion triggered by the US government shutdown is providing a short-term boost to the US dollar.

In the short term, GBP/USD may remain in the range of 1.3250-1.3350, and we need to focus on further guidance from the speeches of Federal Reserve officials and UK inflation data.