The pound traded around 1.3330 against the dollar in Asian trading on Monday, essentially unchanged from Friday's close of 1.3324. After rebounding from around 1.3300 in the early morning, it lacked further upward momentum, and selling pressure on the dollar eased significantly. The pound's recent support has primarily come from expectations of a Bank of England interest rate hike. The market has fully priced in a 25 basis point rate hike by the Bank of England in November, raising the benchmark rate from 3.75% to 4.0%, with a probability of another rate hike in December around 50%. Major institutions such as Morgan Stanley and UBS expect the Bank of England to raise interest rates by 25 basis points each in November and February. While Bank of England Governor Bailey recently stated that the "second-round inflation effect" from rising energy prices has been contained so far, he emphasized that high inflation is "extremely frustrating" and did not explicitly rule out a rate hike. However, Bank of England Chief Economist Peale expressed skepticism about the market pricing in four rate hikes in the next year, suggesting a dovish repricing risk on the yield curve. As for the US dollar, it fell to a two-week low last Friday, ending a four-week winning streak, mainly due to a sharp decline in US Treasury yields from multi-year highs, coupled with Federal Reserve Chairman Warsh's refusal to release further policy signals, significantly cooling expectations for an October rate hike. However, the market still prices in a greater than 90% probability that the Fed will raise rates by 25 basis points in December, with the inflation risk from rising energy prices remaining a potential support. Tensions remain high in the Middle East. Iran's Revolutionary Guard claimed an oil tanker struck a mine and exploded in the Strait of Hormuz on Sunday. The secretary of Iran's Supreme National Security Council warned of retaliatory plans for a new round of attacks against the US and Israel. Safe-haven demand provided some support for the US dollar. Technically, the GBP/USD pair remains below its 100-day simple moving average on the daily chart, while also being capped by the 50.0% Fibonacci retracement level, maintaining a bearish medium-term outlook. The 38.2% Fibonacci retracement level forms a recent strong resistance zone, where any rebound is likely to face resistance. The daily RSI is around 47, near neutral territory, indicating insufficient directional momentum. On the downside, the 23.6% Fibonacci retracement level is the first line of defense, with deeper support at the Fibonacci cycle low around 1.3138. A decisive break above 1.3343 and a hold above 1.3390 could ease the medium-term bearish structure; a break below 1.3265 could lead to a further pullback to the 1.3138 area. Editor's Summary: The pound/dollar exchange rate is currently caught in a tug-of-war between "expectations of a Bank of England rate hike providing support" and "weakening dollar selling momentum." Bailey's balanced remarks slightly dampened market bets on consecutive large rate hikes, but a November rate hike is still highly priced in, providing downside support for the pound. The dollar is pressured by falling US Treasury yields and cooling expectations of an October rate hike, but the risk of a December rate hike and Middle East geopolitical premiums limit its downside. Key events to watch going forward include the UK's September inflation data, the UK budget on October 28th, the Bank of England's November interest rate decision, and the Federal Reserve's October 28th policy meeting.