GBP/USD Analysis Today: Potential for Pound to Rise
Despite the recent decline in the GBP/USD pair, with the British pound hitting a two-month low at 1.2907, there is potential for a rebound ahead. Pantheon Macroeconomics predicts that an expansionary budget could provide a boost to the British economy.
Rather than a budget focused on austerity measures, Pantheon Macroeconomics suggests that the UK government will introduce a more flexible fiscal policy on October 30. This move could potentially increase GDP by 0.5% in the 2025/26 fiscal year.
Rachel Reeves, Chancellor of the Exchequer, is expected to implement significant tax increases but also ease fiscal policy to support growth. This approach, paired with the Bank of England’s cautious stance on interest rate cuts, could drive sterling’s outperformance against other major currencies.
Impact on Sterling and Financial Markets
The budget announcement is eagerly awaited by investors and analysts, with expectations running high. A well-received budget, combined with the Bank of England’s policy direction, could shape the future performance of sterling in the foreign exchange markets.
However, there are concerns about the potential impact of tax hikes and spending cuts on the UK economy. Analysts warn of a fragile fiscal outlook and the need for careful balancing to avoid stifling economic growth.
In the coming days, key economic indicators and policy announcements will influence the GBP/USD pair’s movements. Traders should pay close attention to manufacturing and services PMI readings, as well as comments from the Bank of England Governor.
Technical Forecast for GBP/USD Pair
Technical analysis points to a bearish trend in the GBP/USD pair, with key support levels to watch. Stability below 1.3000 could strengthen the bearish momentum, while a break above 1.3150 would signal a potential reversal.
Overall, market participants are advised to closely monitor developments in the UK economy, fiscal policy, and central bank decisions to navigate the complexities of trading the GBP/USD pair.
Source : www.dailyforex.com