The British pound (GBP) experienced a decline against the US dollar during North American trading on Wednesday, following reports casting doubt on Prime Minister Keir Starmer’s leadership just ahead of the UK budget announcement. Currently, the GBP/USD exchange rate is down more than 0.34%, sitting at 1.3105.
Sterling declines as Starmer confronts leadership speculations amid expectations of a Bank of England interest rate cut next month
Reports in UK newspapers suggest that some allies of the Prime Minister are entangled in a concerning scheme. However, Starmer distanced himself from a press conference where unnamed supporters claimed he would resist any leadership challenges, as noted by Reuters.
Wes Streeting, the Health Secretary named as a potential challenger, dismissed the rumors and stated on Sky News, “I am not going to call for the Prime Minister to resign.”
This situation, combined with lackluster employment data released on Tuesday, has heightened speculation regarding a possible interest rate cut by the Bank of England (BoE) in December. Previously, BoE Governor Andrew Bailey sided with the hawks in a 5-4 vote. But with unemployment now at 5% and wage growth decreasing, traders are allowing nearly a 90% chance of a 25 basis point interest rate cut in December, according to data from Prime Market Terminal.
On the other side of the Atlantic, the Wall Street Journal reported hopes for an end to the government shutdown, which has affected economic indicators. The US dollar index (DXY) has risen 0.13%, trading at 99.58, recovering from its Tuesday lows.
Despite this, the dollar’s resurgence remains uncertain, as about 80% of surveyed economists anticipate a 25 basis point rate cut from the Fed next month.
Furthermore, Representative Scalise informed CNBC that a vote in the U.S. House of Representatives regarding the government shutdown is planned for around 7 PM ET. As government agencies reopen, there’s a chance of numerous economic indicators being released after being on hold since October 1 due to federal closures.
GBP/USD Price Forecast: Technical Assessment
The outlook for GBP/USD indicates a continued downward bias. Sellers will need to push the rate below 1.3100 to challenge the recent cycle low of 1.3010, which was observed on November 5. Conversely, breaking above these points could lead to a test of the April 7 low of 1.2707.
If daily closing prices exceed 1.3100, the market may stabilize around 1.3100 to 1.3150. This stabilization reflects the lack of catalysts given the declining UK economy and ongoing U.S. government shutdown.
This week’s British pound price
The following table outlines the percentage change in the British Pound (GBP) against major currencies this week, indicating that the pound was strongest against the Japanese yen.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.22% | 0.23% | 0.57% | -0.29% | -0.68% | -0.63% | -1.03% | |
| EUR | 0.22% | 0.44% | 0.82% | -0.10% | -0.48% | -0.44% | -0.83% | |
| GBP | -0.23% | -0.44% | 0.47% | -0.54% | -0.92% | -0.88% | -1.27% | |
| JPY | -0.57% | -0.82% | -0.47% | -0.92% | -1.30% | -1.25% | -1.68% | |
| CAD | 0.29% | 0.10% | 0.54% | 0.92% | -0.30% | -0.35% | -0.80% | |
| australian dollar | 0.68% | 0.48% | 0.92% | 1.30% | 0.30% | 0.04% | -0.36% | |
| new zealand dollar | 0.63% | 0.44% | 0.88% | 1.25% | 0.35% | -0.04% | -0.40% | |
| swiss franc | 1.03% | 0.83% | 1.27% | 1.68% | 0.80% | 0.36% | 0.40% |
The heat map demonstrates the percentage changes among major currencies. The base currency is listed in the left column, and the quote currency runs along the top row. For example, selecting British Pounds from the left and finding the corresponding box for US Dollars shows the percentage change representing GBP (Base)/USD (Quote).
