The GBP/USD currency pair made an effort to establish stability on Thursday, with trading activity hovering around the 1.3413 USD mark. Nevertheless, market participants are exhibiting a prudent approach in light of the subdued projections for the UK economy and the ambiguity surrounding the government’s forthcoming budget announcement in November. The United Kingdom The projected trajectory for GDP growth indicates a sustained moderate pace as we approach the end of the fiscal year.
Concurrently, inflation rates are anticipated to escalate to 4%, effectively doubling the target set forth by the Bank of England. Recent data indicate that the economy is experiencing a deceleration in growth following a robust beginning to 2025. The pound exhibited a subdued response to this data. Nevertheless, market participants are apprehensive that prospective tax hikes in the forthcoming budget – designed to uphold adherence to fiscal regulations – may impose additional strain on the currency. This week, the spotlight is on addresses delivered by Bank of England representatives Huw Pill and Catherine Mann. Both parties had previously endorsed maintaining the holding rates at a consistent level during the month of September. Monetary authorities have previously cautioned that international markets may encounter a disruption should investors start to question the future potential of the artificial intelligence industry or the autonomy of the US Federal Reserve.
A tight consolidation band has emerged in the vicinity of 1.3420. In the wake of a downward breakout, the currency pair is currently exhibiting a trajectory that suggests a decline towards the 1.3300 level. This action signifies merely the initial segment of the third descending wave in the overarching bearish trend, with the principal objective identified at 1.3130. This situation is substantiated by the MACD indicator, which shows the signal line positioned beneath the zero mark and exhibiting a pronounced downward trajectory. The currency pair has established a consolidation range centered at the 1.3415 level. The ongoing decline perpetuates the bearish trend, aiming for a localized target of 1.3337. At this juncture, a corrective retracement towards the 1.3415 mark is projected. Subsequent to this, a further retracement towards a minimum of 1.3300 is anticipated, with the potential for an extension of the bearish trajectory down to 1.3200 also on the table.
This perspective is fundamentally backed by the Stochastic oscillator, which indicates that the signal line is positioned beneath 80 and is exhibiting a pronounced downward trajectory towards 20. The GBP/USD has temporarily halted its downward trajectory; however, substantial downside risks persist, driven by domestic economic uncertainties and impending fiscal policy deliberations. The technical framework indicates a potential for additional downturns, with critical support thresholds identified at 1.3337 and 1.3300 warranting attention.