GBP/USD Halts Decline but Inflation Risks Linger

The GBP/USD pair attempted to stabilise on Thursday, trading around 1.3413 USD. However, investor sentiment remains cautious amid a weak outlook for the UK economy and uncertainty surrounding the government's November budget.
RoboForex | 66 dni temu

UK GDP growth is projected to remain moderate through year-end, while inflation is forecast to rise to 4% – double the Bank of England's target. Recent data confirm the economy is losing momentum after a strong start to 2025.

The pound showed a muted reaction to this data. Nonetheless, markets are concerned that potential tax increases in the upcoming budget – aimed at ensuring compliance with fiscal rules – could exert further pressure on the currency.

This week, speeches from Bank of England officials Huw Pill and Catherine Mann are in focus. Both previously supported holding rates steady in September. Monetary policymakers have previously warned that global markets could face a shock if investors begin to doubt the prospects for the artificial intelligence sector or the independence of the US Federal Reserve.

Technical Analysis: GBP/USD

H4 Chart:

A narrow consolidation range has formed around 1.3420. Following a downward breakout, the pair is developing a decline towards 1.3300. This move represents only the first half of the third declining wave within the broader downtrend, with the primary target seen at 1.3130. This scenario is technically confirmed by the MACD indicator, whose signal line lies below zero and is pointing firmly downward.

H1 Chart:

The pair has formed a consolidation range around 1.3415. The subsequent downward movement continues the bearish wave towards a local target of 1.3337. Upon reaching this level, a corrective pullback towards 1.3415 is anticipated. Following this, another decline towards at least 1.3300 is expected, with an extension of the downward structure to 1.3200 also possible. Technically, this outlook is supported by the Stochastic oscillator, whose signal line is below 80 and is turning sharply downward towards 20.

Conclusion

While the GBP/USD has paused its descent, significant downside risks remain due to domestic economic concerns and looming fiscal policy decisions. The technical structure continues to point to further declines, with key support levels at 1.3337 and 1.3300 in focus.

Disclaimer:

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

RoboForex
Wprowadzić: STP, ECN, Market Maker
Regulacja: FSC (Belize)
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