GBP/USD is currently positioned around 1.3160, showing minimal movement after a period of erratic trading influenced by differing monetary policy perspectives from the Bank of England and the Federal Reserve. The pair briefly hit 1.3185, a resistance level aligned with its 20-day Simple Moving Average, before retreating as demand for the U.S. Dollar rose in expectation of important Nonfarm Payrolls data and UK Consumer Price Index figures. The Pound is currently constrained by rising speculation about a possible rate cut from the BoE as early as December, with money markets suggesting an 83% chance of this easing taking place. At this point, the chances of a Fed cut in December have risen to 55%, a significant shift from being under 50% just a week ago. This change comes after the publication of disappointing jobless figures, showing 232K initial claims and 1.957 million continuing claims, suggesting a cooling but still strong U.S. labor market. The Pound Sterling is currently facing a period of weakness as market participants brace for the upcoming release of the UK October CPI. Expectations center on a further slowdown from September’s 2.8% headline rate, influenced by energy base effects and housing costs contributing to disinflation. A weaker CPI print could reinforce market expectations for a BoE rate cut, leading to downward pressure on GBP/USD towards 1.3080.
Chancellor Rachel Reeves’ Autumn Budget, scheduled for November 26, brings about financial unpredictability. Experts anticipate that Reeves might seek to raise £30–£40 billion through fiscal strategies to tackle rising deficits. Fluctuations in UK gilt yields, driven by uncertainty over potential corporate tax reforms and spending cuts, have reduced the immediate appeal of Sterling. The U.S. Dollar Index is currently positioned at approximately 99.46, supported by a cautious risk sentiment ahead of the upcoming NFP and Fed minutes. Market participants expect the U.S. economy to create around 50,000 jobs in November, with the unemployment rate holding steady at 4.3%. Enhanced data could strengthen the US Dollar, possibly pushing GBP/USD down to the 1.3090–1.3110 range. Federal Reserve officials share a complex viewpoint: Governor Christopher Waller indicated that a slowdown in hiring could justify a rate cut in December, while Vice Chair Michael Barr cautioned against quick easing due to robust consumer demand. This persistent uncertainty in policy keeps DXY hovering near the 100.00 mark, while also holding Sterling back from breaking through resistance levels.
On the daily chart, GBP/USD is currently consolidating below the 20-day SMA (1.3185), with the formation of consecutive doji candles reflecting a state of market indecision. The short-term structure shows moving averages — the 20, 50, 100, and 200 SMAs — all converging within the range of 1.3141–1.3158, indicating a state of equilibrium before a possible directional breakout. A consistent advance past 1.3185 would open the path to 1.3210, followed by 1.3247 and 1.3290, with the next barrier aligning with the 100-day SMA. Conversely, failing to hold above 1.3130 could indicate potential downside targets at 1.3080 and 1.3045, where traders anticipate fresh buying opportunities on dips. RSI is situated near 50, reflecting a balanced sentiment, while MACD remains neutral. BoE Chief Economist Huw Pill highlighted that inflation has “not slowed as much as anticipated,” urging caution in interpreting the recent data. However, the broader market views his remarks as tactical — gearing up for a gradual reduction in rates as wage pressures start to ease. Swati Dhingra highlighted that “tight policy is doing its job,” indicating possible backing for rate reductions in the forthcoming meeting. Current money market expectations suggest a 25 basis-point decrease in December, with two additional reductions expected in 2026.
This path shows a notable departure from the Fed’s forecasts, suggesting that the initial reduction isn’t completely accounted for until the first quarter of 2026. This situation leads to increasing yield gaps that benefit the USD and limit Sterling’s chances of recovery. Weak Q3 GDP figures from Japan (-0.3%) and Switzerland (+0.1%) have heightened worries about a global slowdown, resulting in a surge of safe-haven investments in the U.S. Dollar. The S&P 500 has fallen beneath its 50-day average (6,707) for the first time since May, resulting in a notable increase in risk aversion that typically affects risk-sensitive currencies like the Pound. At the same time, traders are being careful as they await NVIDIA’s Q3 earnings, which could influence sentiment across tech-focused indices. An underwhelming report is anticipated to result in further declines in equities, which would benefit the Greenback and heighten downward pressure on GBP/USD. CFTC data show that leveraged funds currently maintain a net short position of 22,400 contracts on Sterling, which marks a small increase from the prior week. However, the positioning shows a notable absence of confidence — the ratio of short-to-long positions stands at around 1.18:1, which is considerably lower than the extremes seen during the August selloff. This suggests a degree of ambiguity rather than a clear negative position. Volatility remains subdued, with one-month implied volatility around 7.6%, down from 9.2% in October. The options skew shows a tendency towards safeguarding against declines, implying that traders are concentrating on mitigating risk within the range of 1.3100–1.3050. The 50-hour EMA at 1.3150 serves as intraday support, while the Supertrend resistance near 1.3195 sets the immediate ceiling. A confirmed breakout above this band could lead to short-covering towards 1.3245; however, a failure would likely reinforce the current sideways structure.
Momentum traders see 1.3080 as a crucial turning point — falling below that level could expose 1.3040 and potentially 1.2985, in line with the August low. Conversely, if GBP/USD stays above 1.3160 after the CPI release, it could approach the 1.33 level, influenced by weaker U.S. payroll data or dovish remarks from the Fed. With GBP/USD around 1.3160, the market is experiencing fluctuations, impacted by the volatility from Fed data and the dovish adjustments by the BoE. Even with favorable structural conditions for the U.S. Dollar, the failure of the pair to drop below 1.3130 suggests persistent support due to oversold positioning of the Sterling. Until the UK CPI and NFP results offer clear insights, momentum is anticipated to stay limited below 1.3210, with a short-term tendency leaning towards a bearish outlook around 1.3080. If inflation does not meet expectations and the Fed maintains a hawkish stance, a drop to 1.3045 is possible. Conversely, a lackluster U.S. jobs report or accommodating remarks from the Fed might spark a countertrend rally surpassing 1.3245. The TradingNews outlook for GBP/USD is currently rated as Hold, indicating a bearish sentiment in the short term while keeping a neutral perspective as we near year-end. This evaluation is shaped by the reduction in policy differences and the expected resurgence of volatility within the 2024 range of 1.2980–1.3350.