- GBP/USD outlook stays positive as dollar weakens after soft data.
- UK budget uncertainty continues to cap the pound gains.
- Increased bets on Fed easing in December and the new Fed Chair appointment weaken the US dollar further.
The GBP/USD outlook remains positive as the price extends its recovery beyond the 1.3200 mark amid shifting macroeconomic conditions in the US and UK that favor the pound. Improved risk sentiment, stable UK data, and reduced recession fears have pushed sterling to regain ground after struggling for several weeks. Meanwhile, the US dollar stays on the back foot as Treasury yields slip and traders increasingly bet on Fed rate cuts in December. Dollar’s safe-haven demand has also softened, lending additional breathing space to the GBP/USD.
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The move higher accelerated during Wednesday’s Asian session, with the Dollar Index drifting lower to 99.60 after another round of soft US data, reinforcing expectations of a December rate cut. Retail Sales gained only 0.3%, meeting estimates, while PPI confirmed a broader easing in inflationary pressure. Labor market signals have also shown deterioration, with ADP reporting average job losses near 13,500 in early November. These developments have prompted traders to scale back their dollar-long positions.
Reports that President Trump is considering Kevin Hassett as a successor to Fed Chair Powell have also influenced sentiment, adding another layer of uncertainty to the policy outlook. A potential leadership change could increase the likelihood of a more dovish stance, further weakening the US dollar.
On the other hand, the British pound is drawing support from UK services and labor data, revealing enough room to ease recession worries, even as inflation continues to cool. However, markets are expecting an 80% chance of a 25-basis-point rate cut in December by the Bank of England, pushing gilt yields lower ahead of the Autumn Budget.
Traders are awaiting Chancellor Reeves’ Autumn budget, where new taxes are expected to be imposed to restore fiscal credibility and address rising debt-servicing costs. A responsible budgetary stance could increase long-term confidence in UK assets even if near-term growth impact remains mixed.
GBP/USD Key Events Ahead
Today’s high-impact events include:
- UK Autumn Budget Forecast
- Durable Goods Orders
- Weekly Jobless Claims
- Chicago PMI
GBP/USD Technical Outlook: 200-MA Capping Gains
The 4-hour chart for GBP/USD shows the gains capped by the 200-period MA, with price retreating from the 1.3200 level during the earlier London session. However, the 20-, 50-, and 100-MA remain supportive, pointing north.
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The price is expected to oscillate between the MA cluster at 1.3125 and 1.3210, in search of a clear trend bias. A sustained break above 1.3200 could lead to 1.3250 and 1.3300. On the other hand, a move below 1.3125 could propel it lower to 1.3100 and 1.3050.
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