GBP/USD Price Forecast: Softens to near 1.3200, staying bearish under 100-day SMA
- GBP/USD softens to near 1.3210 in Friday’s early European session.
- The pair retains a negative tone below the 100-day SMA amid an oversold RSI condition.
- The immediate resistance level is located at 1.3215; the initial support level to watch is 1.3140.
The GBP/USD pair trades in negative territory around 1.3210 during the early European session on Friday. The British Pound (GBP) weakens against the US Dollar (USD) amid growing domestic fiscal concerns ahead of the upcoming UK budget.
The UK Office for National Statistics showed earlier this week that UK public sector borrowing hit £18.27 billion in August, exceeding the market forecast of £15.35 billion a year prior and £2.04 billion in July. The August reading was higher than expected. The cumulative deficit from April to August reaches £77.3 billion, surpassing the Office for Budget Responsibility's projection by £8.1 billion.
UK Chancellor John Healey will face pressure to raise taxes or cut spending at next month’s budget, as soaring borrowing costs because of the Iran war and weaker growth have wiped nearly £12 billion off the UK government’s fiscal headroom.
Markets are pricing in a 67% odds of a Bank of England (BoE) rate hike in November, with another increase expected in December, according to LSEG data.
Pound softens as BoE signals greater willingness to tighten on persistent energy pressures
Strategists at Scotiabank 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.
Technical Analysis: GBP/USD keeps a bearish vibe amid oversold condition
In the daily chart, GBP/USD holds below the 20-day Bollinger middle band and the 100-day simple moving average (SMA), keeping the near-term bias bearish as price remains compressed under a dense cluster of overhead levels. The latest Bollinger lower band sits just above spot, underscoring that the recent slide is pressing against the lower volatility envelope, while the Relative Strength Index (14) around 24 signals oversold conditions that could slow immediate downside, rather than reverse it outright.
On the topside, initial resistance is located at the 20-day Bollinger lower band near 1.3215, a minor pivot just above the current price. Further north, the next hurdle is seen at the July 28 low of 1.3273, en route to the 100-day SMA at 1.3425 and the Bollinger middle band at 1.3438 form a broader cap. The Bollinger upper band at 1.3660 marks a more distant barrier.
On the other hand, the June 24 low of 1.3140 acts as an initial support level for the major pair. Any follow-though 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.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
추천 기사
