FX.co ★ Wiking | GBP/USD

GBP/USD is trading in negative territory near 1.3244 in the initial European session today, Friday. The British Pound (GBP) is down versus the US Dollar (USD) as rising fiscal fears emerge ahead of the upcoming UK budget. As reported by the UK Office for National Statistics earlier this week, UK Public Sector Borrowing stood at £18.27 billion in August, above the forecasted level of £15.35 billion compared to £2.04 billion a year ago and July levels. The August data came in higher than expected. The total deficit between April-August stands at £77.3 billion, £ 8.1 billion higher than the Office for Budget Responsibility's estimate. UK C, Chancellor John Healey will come under pressure to increase taxation or reduce expenditure in the upcoming budget, as rising borrowing costs due to the Iran War and slowing growth have erased almost £12 billion of fiscal flexibility from the UK Treasury. The implied probability of the BoE hiking rates in November is 67%, followed by another increase in December. According to strategists at Scotiabank, “The GBP is weaker, in line with its core currency peers.” They further point out that “BoE policymaker messaging is still a crucial driver; BoE Deputy Governor Lombardelli will warn that tighter policy is increasingly likely if energy prices remain high, an advance copy of her comments to be delivered shortly indicates.” This dual effect of weak performance by GBP on one hand and strong messaging by BoE on the other reflects the importance of energy costs for the markets.

On the daily chart, GBP/USD trades below both the 20-period Bollinger middle line and the 100-period simple moving average (SMA), leaving the short-term outlook on the bears’ side as price is squeezed beneath a large cluster of resistance zones. The recent Bollinger lower band sits just above the spot level, suggesting the downward move is coming under pressure from the lower range of volatility, while the Relative Strength Index (14) at 24 is in oversold territory. On the topside, initial resistance is the 20-day Bollinger lower band around 1.3215. Another resistance is the July 28 low at 1.3273, followed by the 100-day SMA at 1.3425 and then the Bollinger middle band at 1.3438. In the longer term, the Bollinger upper band at 1.3660 stands out as resistance. On the downside, initial support comes from the June 24 low of 1.3140. If this level breaks, it could open the door to the November 21, 2025 low of 1.3038 and then the November 5, 2025 low of 1.3010.