British Pound falls as UK Finance Minister Healey's budget approaches

Limited fiscal headroom leaves UK Finance Minister John Healey under pressure to tackle living costs.
With economic releases approaching, markets anticipate no change in the Fed’s interest rates.
Demand for US Treasury bonds eased as sentiment towards AI improved ahead of technology earnings.

At around 1.3290 in Wednesday’s Asian session, GBP/USD is on course for a fourth consecutive day of losses. Attention is turning to UK Finance Minister John Healey’s first budget, which he is due to deliver later in the day.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Pressure is growing on UK Finance Minister Healey to offer relief to households still struggling with the cost of living, alongside much-needed assistance for businesses throughout the country.

There is little scope for policy manoeuvre, however. High government borrowing costs and the substantial tax rises introduced by his predecessor, Rachel Reeves, leave Healey operating within tight fiscal limits.

A firmer US Dollar (USD) is weighing on GBP/USD as investors adopt a cautious stance before the US Federal Reserve’s (Fed) interest rate announcement later in the day. GDP growth figures and the Personal Consumption Expenditures (PCE) price index are also in focus as investors seek indications of the likely course of monetary policy.

Markets assign a 92.8% probability to unchanged rates at Wednesday’s meeting, according to the CME FedWatch tool. The Fed is widely expected to leave its benchmark rate within the current target range of 3.75% to 4.0%, while the probability of a December rate increase stands at 84.4%. Remarks from Fed Chair Kevin Warsh will be closely scrutinised for even modest signals about the central bank’s economic outlook.

Improved sentiment towards artificial intelligence has meanwhile curbed appetite for safe-haven Treasury bonds. Results due from leading technology companies are expected to shed further light on AI-related demand—a significant contributor to US economic growth—as some of the safe-haven inflows prompted by the recent global technology sell-off unwind.

Technical Outlook: GBP/USD Remains Below Key EMAs

Trading at 1.3290 on the daily chart, GBP/USD remains constrained beneath the short-term Exponential Moving Average (EMA) at 1.3323 and the 50-day EMA at 1.3351. With the price below both the nine-day and 50-day EMAs, the latest recovery attempt appears to be running out of momentum, leaving the broader bearish structure in place. A 14-day Relative Strength Index (RSI) reading near 46 points to waning bearish momentum, although it has yet to reach oversold territory.

The nine-day EMA provides the first resistance level, followed by the 50-day EMA. A daily close above the latter would be required to relieve near-term downward pressure and pave the way for a more durable recovery. While the pair remains below these moving averages, rallies are likely to attract renewed selling. Traders will therefore monitor its behaviour around these EMA resistance levels for signs of whether sellers remain in control.

Chart Analysis GBP/USD — GBP/USD Holds Below Moving Averages: Daily Chart

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Pound Sterling Underperforms Australian Dollar Today

Today’s percentage movements in the British Pound (GBP) relative to the major currencies listed appear in the table below. The Australian Dollar was the currency against which the British Pound performed most weakly.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.06%	0.13%	-0.06%	0.09%	-0.10%	1.34%	0.16%
EUR	-0.06%		0.07%	-0.12%	0.04%	-0.16%	1.27%	0.10%
GBP	-0.13%	-0.07%		-0.19%	-0.05%	-0.23%	1.18%	0.02%
JPY	0.06%	0.12%	0.19%		0.14%	-0.04%	1.38%	0.20%
CAD	-0.09%	-0.04%	0.05%	-0.14%		-0.19%	1.24%	0.07%
AUD	0.10%	0.16%	0.23%	0.04%	0.19%		1.44%	0.26%
NZD	-1.34%	-1.27%	-1.18%	-1.38%	-1.24%	-1.44%		-1.15%
CHF	-0.16%	-0.10%	-0.02%	-0.20%	-0.07%	-0.26%	1.15%

Percentage movements between the major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. Selecting the British Pound on the left, for instance, and following that row across to the US Dollar gives the percentage change for GBP (base)/USD (quote) in the corresponding cell.