GBP/USD softens to near 1.3210 in the early European session on Friday. The pair maintains a negative outlook beneath the 100-day SMA, coinciding with an oversold RSI condition. The immediate resistance level is positioned at 1.3215; the initial support level to monitor is 1.3140. The GBP/USD pair is currently positioned in negative territory, trading at approximately 1.3210 during the early European session on Friday. The British Pound weakens against the US Dollar amid growing domestic fiscal concerns ahead of the upcoming UK budget. The UK Office for National Statistics reported earlier this week that public sector borrowing in the UK reached £18.27 billion in August, surpassing the market forecast of £15.35 billion from the previous year and up from £2.04 billion in July. The August reading exceeded expectations. The cumulative deficit from April to August amounts to £77.3 billion, exceeding the Office for Budget Responsibility’s forecast by £8.1 billion.
UK Chancellor John Healey is poised to encounter significant pressure to either increase taxes or reduce spending in the upcoming budget next month. The surge in borrowing costs attributed to the Iran war, coupled with sluggish growth, has diminished the UK government’s fiscal headroom by nearly £12 billion. Markets are currently reflecting a 67% probability of a rate hike by the Bank of England in November, with an additional increase anticipated in December, as indicated by LSEG data. Strategists note that the Pound is trading weaker, with “the GBP is softer, in line with its core currency peers.” They add that policy messaging from the BoE remains a key driver, highlighting that BoE Deputy Governor Lombardelli “will warn that tighter policy in increasingly likely if energy prices remain high, an advance copy of her comments to be delivered shortly indicate.”
This combination of softer GBP price action and firmer BoE rhetoric underscores the market’s sensitivity to the path of energy costs and the central bank’s evolving reaction function. In the daily chart, GBP/USD remains positioned beneath the 20-day Bollinger middle band and the 100-day simple moving average, sustaining a bearish near-term bias as the price continues to be constrained under a significant cluster of overhead resistance levels. The latest Bollinger lower band is positioned just above the spot, indicating that the recent decline is nearing the lower volatility envelope. Meanwhile, the Relative Strength Index (14) at approximately 24 suggests oversold conditions that may temper immediate downside momentum, rather than instigate a reversal.
On the topside, initial resistance is situated at the 20-day Bollinger lower band around 1.3215, a minor pivot just above the current price. Further north, the next hurdle is identified at the July 28 low of 1.3273, as the trajectory moves toward the 100-day SMA at 1.3425 and the Bollinger middle band at 1.3438, which collectively establish a more extensive resistance zone. The Bollinger upper band at 1.3660 signifies a more remote threshold. Conversely, the low of 1.3140 recorded on June 24 serves as a preliminary support level for the major pair. Any follow-through selling below this level could pave the way to the November 21, 2025 low of 1.3038, followed by the November 5, 2025 low of 1.3010.
