GBP/USD Weekly Forecast: Pound Sterling stays vulnerable, braces for action-packed week


  • The Pound Sterling tumbled to its lowest level since mid-August against the US Dollar.
  • Top-tier US economic data and the UK’s Autumn Budget could rock the GBP/USD pair.
  • The Bear Cross on the daily chart keeps the downside open for the Pound Sterling.

The Pound Sterling (GBP) remained at its lowest level in over two months versus the US Dollar (USD), leaving the GBP/USD vulnerable below the 1.3000 threshold.

Pound Sterling dropped and USD popped on safe-haven demand

The demand for the safe-haven USD dominated throughout the week for varied reasons, including the heightened uncertainty leading into the November 5 US presidential election, rising Middle East geopolitical tensions and earnings season globally.

There were no signs of a ceasefire between Israel and Iran, as the former continued to attack the Iran-backed Lebanese militant group Hezbollah in Beirut.

Meanwhile, markets priced in higher chances of a victory for the Republican nominee and the former US President Donald Trump in the presidential race. Trump’s trade and expansionary fiscal policies are seen as inflationary, calling for higher interest rates and the Greenback.

Furthermore, investors remained wary ahead of earnings reports from US titans such as Tesla Inc., Amazon, Google, Nvidia, etc., scurrying for safety in the Greenback. Persistent bets for a less aggressive easing policy likely to be adopted by the Fed also boded well for the buck.

This risk-averse market environment exacerbated the pain in the Pound Sterling, which was already hit a week ago by the increased bets of a Bank of England (BoE) interest rate cut next month after a bigger-than-expected cooldown in the UK inflation for September.

Data released by the Office for National Statistics (ONS) showed on October 16 that the annual UK Consumer Price Index (CPI) inflation fell sharply to 1.7% in September from 2.2% in August, the lowest reading since April 2021.

However, heading into the weekend, the Pound Sterling recovered some ground as the USD rally took a breather ahead of mid-tier US economic data releases. A cautiously optimistic market mood also allowed the risk-sensitive GBP to find some demand.  

Top-tier US economic data and UK Budget on tap

Clocks turn back in the UK at the onset of an action-packed week.

After taking a breather, the market volatility is likely to ramp up in the upcoming week, with a bunch of high-impact economic releases due from the US. Meanwhile, the UK is set to release its Autumn Budget, which could have a significant impact on the local bond market and the Pound Sterling.

Monday is a quiet calendar on both sides of the Atlantic but Tuesday sees the release of the US Conference Board (CB) Consumer Confidence and JOLTS Job Openings data.

On Wednesday, the UK Autumn Budget and the US Automatic Data Processing (ADP) Employment Change data will hog the limelight.

BoE policymaker Sarah Breeden will speak early Thursday while the Fed’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) Price Index for September, and the Jobless Claims data will be reported later that day in the American trading hours.

The all-important US Nonfarm Payrolls and the wage inflation data will be eagerly awaited on Friday, which will provide fresh hints on the size and the pace of the next Fed rate cuts. The ISM Manufacturing PMI will also hold some relevance heading into the Fed’s ‘blackout period’, starting from Saturday until the November 7 monetary policy meeting.  

Amidst a busy calendar, traders will also pay close attention to the Middle East geopolitical risks and the uncertainty around the November 5 US presidential election.

GBP/USD: Technical Outlook

The GBP/USD pair battled the 100-day Simple Moving Average (SMA) at 1.2969 as the downtrend extended into the fourth consecutive week.

A weekly closing below that level could provide fresh zest to Pound Sterling sellers.  

The next bearish target is seen at the June 12 high of 1.2861, below which the critical 200-day SMA cap at 1.2803 will be challenged.

If buyers fail to defend that key support, a fresh downside could initiate toward the August 8 low of 1.2665.

The 14-day Relative Strength Index (RSI) holds well below the 50 level, currently near 40, backing the downside bias.

Adding credence to the bearish outlook, the 21-day SMA crossed the 50-day SMA from above on a daily closing basis on Wednesday, charting out a Bear Cross.

On the flip side, a corrective move higher will need a sustained break above the 1.3000 psychological level, followed by the acceptance above the 21-day SMA at 1.3092.

Further up, the 50-day SMA at 1.3143 could be next on the buyers’ radars. 

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.

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD weighed down by China, tariffs

AUD/USD weighed down by China, tariffs

AUD/USD remained on the back foot, slipping back to the area of multi-year lows around 0.5950 on the back of mounting fears surrounding tariffs and their impact on the Chinese economy.

AUD/USD News
EUR/USD refocuses on 1.1000 amid tariffs jitters

EUR/USD refocuses on 1.1000 amid tariffs jitters

EUR/USD reversed two daily pullbacks in a row an d managed to advance to the boundaries of the 1.1000 barrier on the back of fresh weakness hurting the US Dollar and persistent tariff fears.

EUR/USD News
Gold erases gains, back to the $2,980 zone

Gold erases gains, back to the $2,980 zone

Gold prices now lose extra ground and slip back to the area of daily troughs near $2,980 mark per troy ounce following an unsuccesful attempt to maintain the trade above the critical $3,000 level earlier in the day.

Gold News
RBNZ set for another interest rate cut amid trade tariff uncertainty

RBNZ set for another interest rate cut amid trade tariff uncertainty

The Reserve Bank of New Zealand is on track to deliver a 25 basis point cut to the Official Cash Rate, bringing down the key policy rate from 3.75% to 3.50% following its April monetary policy meeting on Wednesday. 

Read more
The Fed is looking at a hefty price level

The Fed is looking at a hefty price level

We are still in thrall to tariffs, the faux-macro “data” driving markets. The WSJ editorial board advised other countries to take their tariffs to zero so that Trump’s “reciprocal” tariffs will have to be zero, too. Cute, but no cigar.

Read more
The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

Read More

Majors

Cryptocurrencies

Signatures

Best Brokers of 2025