GBP/USD Price Forecast: Tumbles to two-month low, traders ditch GBP on UK's budget


  • GBP/USD breaks below the 100-day SMA at 1.2975, with further downside possible if it closes below the 1.2900 mark.
  • Key support lies at 1.2885, with the 200-day SMA at 1.2807 as the next target for sellers.
  • Resistance emerges at 1.2950/60, with RSI signaling bearish momentum approaching oversold conditions, potentially capping a rebound.

The Pound Sterling dropped to a new two-month low of 1.2885 against the Greenback during the session, as UK Gilts rose sharply following the budget release. However, the GBP/USD has recovered some ground yet is losing over 0.30% and trades at 1.2918.

GBP/USD Price Forecast: Technical outlook

The GBP/USD has broken below the 100-day Simple Moving Average (SMA) at 1.2975, extending its losses below the ascending channel support trendline, paving the way for further downside.

Although the 1.2900 figure was cleared, Pound sellers must achieve a daily close below it. In that outcome, the GBP/USD's next support would be 1.2885, the day’s low, followed by the 200-day SMA at 1.2807.

Conversely, if buyers keep the GBP/USD afloat above 1.2900, the first resistance would be a previous support trendline at around 1.2950/60 before bulls can test 1.2999.

Oscillators favor further GBP/USD downside, as the Relative Strength Index (RSI) deepened its fall in bearish territory, about to reach oversold conditions.

GBP/USD Price Chart – Daily

Pound Sterling FAQs

The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).

The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.

Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.

Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD clings to daily gains around 1.0860

EUR/USD clings to daily gains around 1.0860

The US Dollar manages to rebound from earlier lows, prompting EUR/USD to surrender part of its initial advance to the vicinity of the 1.0900 region as investors shigt their attention to the upcoming critical US labour market report on Friday.

EUR/USD News
USD/JPY maintains its offered stance in the low-152.00s

USD/JPY maintains its offered stance in the low-152.00s

USD/JPY could not sustain the earlier bull run to the 153.00 region, succumbing to the prevailing BoJ-induced appreciation of the Japanese yen and thus returning to the 152.30-152.40 band amidst lower US yields across the curve ahead of Friday's US NFP.

USD/JPY News
Gold retreated sharply, trades around $2,740

Gold retreated sharply, trades around $2,740

Prices of Gold trade markedly on the defensive on Thursday following a marginal uptick in the Greenback and declining US yields. Despite the daily pullback, the yellow metal is anticipated to remain bolstered by steady uncertainty pre-US election.

Gold News
Eurozone inflation up to 2% in October as unemployment hits new record low

Eurozone inflation up to 2% in October as unemployment hits new record low

The Eurozone’s inflation rate increased more than expected, with core inflation stable at 2.7%. The direction of incoming data in the region is not quite clear, which provides the ECB with confusing signals for the path of rate cuts.

Read more
Bank of Japan holds rates steady amid signs of modest GDP growth

Bank of Japan holds rates steady amid signs of modest GDP growth

Monthly industrial production results have been mixed but generally indicate a modest recovery in third-quarter GDP. Clear guidance from the Bank of Japan remains elusive, with each upcoming meeting being pivotal.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures