The GBP/USD pair held steady on Wednesday, bouncing back from a significant 0.90% decline the previous day. This drop followed comments from UK Finance Minister Rachel Reeves, who indicated potential tax hikes to maintain fiscal stability. Currently, the pair stands at approximately 1.3028.
Pound steadies around 1.3030 amidst caution and strong US data
Chancellor Reeves remarked on Tuesday that the UK has struggled with its budget, hinting at the necessity of raising taxes to stabilize finances.
According to analysts at Société Générale, “She’s outlining the tough measures that will be part of the upcoming budget. It’s evident that her promises have been unmet.”
In other news, the Bank of England (BoE) is expected to maintain current interest rates during its meeting on Thursday. Recent inflation data came in lower than anticipated, raising speculation that the BoE might lower borrowing rates later this year.
US job market shows resilience as ISM services grow
On the other side of the Atlantic, the ISM Services PMI indicated a rebound in business activity for October, with the index climbing to 52.4 from 50 in September. While business activity is on the rise, the prices paid component jumped to 70, marking a peak since October 2022, signaling inflationary concerns.
Similarly, the ADP National Employment Trends reported that non-agricultural employment rose by 42,000 in October, surpassing the forecast of 25,000, and a revision from September’s figure of -29,000.
As a result of the latest U.S. economic updates, market expectations for the Federal Reserve cutting interest rates by 25 basis points in December have decreased, with the probability now at 64%, down from 68% prior to the ADP report.
GBP/USD Price Outlook: Technical Overview
GBP/USD recently surpassed the 200-day simple moving average (SMA) of 1.3254, suggesting further declines may be in the cards. If the pair breaks below the 1.3000 level, it may point towards the April 8 low at 1.2708.
On the flip side, if GBP/USD manages to breach 1.3100, it would likely retest this week’s peak of 1.3139.
This week’s British pound price
The table below outlines the percentage change in the British Pound (GBP) compared to major currencies this week, with the pound performing strongest against the New Zealand dollar.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.47% | 0.73% | 0.15% | 0.81% | 0.81% | 1.38% | 0.76% | |
| EUR | -0.47% | 0.26% | -0.27% | 0.34% | 0.32% | 0.90% | 0.29% | |
| GBP | -0.73% | -0.26% | -0.66% | 0.08% | 0.06% | 0.64% | 0.03% | |
| JPY | -0.15% | 0.27% | 0.66% | 0.63% | 0.63% | 1.20% | 0.73% | |
| CAD | -0.81% | -0.34% | -0.08% | -0.63% | -0.07% | 0.54% | -0.03% | |
| australian dollar | -0.81% | -0.32% | -0.06% | -0.63% | 0.07% | 0.59% | -0.03% | |
| new zealand dollar | -1.38% | -0.90% | -0.64% | -1.20% | -0.54% | -0.59% | -0.61% | |
| swiss franc | -0.76% | -0.29% | -0.03% | -0.73% | 0.03% | 0.03% | 0.61% |
The heat map illustrates the percentage change between major currencies. The left column indicates the base currency while the top row shows the quote currency. For instance, selecting British Pounds from the left and moving horizontally to US Dollars will display the percentage change for GBP (Base)/USD (Quote).
