GBP/USD trades below 1.3100 amid firmer USD, UK budget uncertainty

GBP/USD kicks off the new week on a softer note as less dovish Fed expectations underpin the USD.
The UK budget uncertainty and BoE rate cut bets contribute to the GBP’s relative underperformance.
Traders this week will look forward to important US macro releases for some meaningful impetus.

Haresh Menghani FXStreet

The GBP/USD pair struggles to capitalize on its gains registered over the past two days and kicks off the new week on a softer note amid a broadly firmer US Dollar (USD). Spot prices, however, manage to hold comfortably above last week's swing low and currently trade just below the 1.3100 mark, down less than 0.15% for the day.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, sits near its highest level since late May amid less dovish Federal Reserve (Fed) expectations. In fact, chances for another rate cut by the US central bank in December reduced further following the delayed release of mostly upbeat US Nonfarm Payrolls (NFP) report for September. This offset concerns about the weakening economic momentum on the back of the longest-ever US government shutdown and continues to underpin the USD, and weighs on the GBP/USD pair.

The British Pound (GBP), on the other hand, continues with its relative underperformance amid the uncertainty surrounding the upcoming UK budget and rising bets for an interest rate cut by the Bank of England (BoE) next month. This, in turn, is seen as a key factor acting as a headwind for the GBP/USD pair. Traders, however, seem reluctant to place aggressive directional bets and opt to wait for the UK Chancellor Rachel Reeves’ Autumn Budget on Wednesday. Apart from this, important US macro data will play a key role in providing a fresh impetus.

A rather busy US economic docket this week features the delayed release of the Producer Price Index (PPI) and Retail Sales data, along with the Conference Board's Consumer Confidence Index on Tuesday. This will be followed by the preliminary Q3 GDP print and the Personal Consumption Expenditure (PCE) Price Index report on Wednesday. The latter would offer more cues about the Fed's rate-cut path and influence the near-term USD price dynamics, which, in turn, should help in determining the next leg of a directional move for the GBP/USD pair.

Economic Indicator

Budget Report

The United Kingdom's Budget, or Financial Statement, is a statement made to the House of Commons by the Chancellor of the Exchequer on the nation’s finances and the Government’s proposals for changes to taxation. The Budget also includes forecasts for the economy by the Office for Budget Responsibility (OBR).

EUR/USD climbs to daily highs near 1.1820

EUR/USD now picks up pace and advances to the area of daily peaks north of the 1.1800 barrier at the end of the week. The pair’s decent move higher comes against the backdrop of a generalised lack of direction in the FX galaxy and the mild offered stance in the US Dollar.

GBP/USD trims losses, retests 1.3460

After briefly challenging its key 200-day SMA near 1.3440, GBP/USD now manages to regain some balance and revisit the 1.3460 zone on Friday. Cable’s pullback comes as the selling pressure on the Greenback gathers traction, reigniting some recovery in the risk-linked space.

Gold flirts with four-week highs past $5,200

Gold extends its rebound, climbing for a third consecutive session and pushing back above the $5,200 mark per troy ounce on Friday. The move higher continues to draw support from lingering geopolitical tensions and the ongoing uncertainty surrounding US trade policy, both of which are keeping safe-haven demand firmly in play.

Bitcoin, Ethereum and Ripple consolidate with short-term cautious bullish bias

Bitcoin, Ethereum and Ripple are consolidating near key technical areas on Friday, showing mild signs of stabilization after recent volatility. BTC holds above $67,000 despite mild losses so far this week, while ETH hovers around $2,000 after a rejection near its upper consolidation boundary.

Breaking: US and Israel attack Iran, risk aversion to sweep global markets

Early Saturday, United States (US) President Donald Trump announced that the US had begun “major combat operations” in Iran, following Israel’s pre-emptive missile attacks against Tehran.

Starknet unveils strkBTC, shielded Bitcoin transactions on Ethereum Layer 2

Starknet, the Ethereum Layer 2 network developed by StarkWare, today announced strkBTC, a wrapped Bitcoin asset that introduces optional shielding while preserving full DeFi composability.