British Pound deepens 4-day decline ahead of Fed decision and UK budget

• A 0.14% decline leaves GBP/USD at 1.3321, with losses stretching into a fourth day.
• A rise to 91.7 marks a sharp improvement in US Consumer Confidence, alongside a 1.6% increase in Durable Goods.
• Wednesday brings the Fed decision and UK Autumn Budget into focus.

A 0.14% fall leaves the Pound Sterling lower against the US Dollar for a fourth consecutive day, as the Greenback makes modest gains before Wednesday’s Federal Reserve monetary policy decision. On Tuesday, GBP/USD is trading at 1.3321, confined to a 1.3307-1.3349 range.

Resilient US data backs the Dollar as GBP/USD labours near 1.3300 before key policy decisions

Despite continuing hostilities in the Middle East, market sentiment remains positive. Reports of falling debris over Riyadh in Saudi Arabia indicated that damage had been caused, according to SPA. Iran’s supreme leader Mojtaba Khamenei also restated the country’s conditions for ending the war with the US. Before peace talks can take place, Tehran is demanding that the US naval blockade be lifted and sanctions removed.

Housing figures on the US economic calendar showed a sharp slowdown in New Home Sales: September’s monthly reading was -0.6%, compared with 6.4% in August.

An unexpected improvement in Consumer Sentiment took the October reading to 91.7 from 84.2, the Conference Board (CB) reported, as households became more optimistic about employment prospects and business conditions. Within the survey, 12-month inflation expectations held at 5.8%, still well above the Fed’s target.

September’s Durable Goods Orders increased by 1.6%, accelerating from 0.1%, with business spending remaining robust as AI infrastructure expands. An earlier release put the ADP Employment Change 4-week average at 16.8K, below the previous 18.5K reading, pointing to a modest slowdown in the labour market.

Money-market pricing, meanwhile, points to unchanged Fed rates on Wednesday, with a 19% probability of an increase. According to Prime Terminal, the odds for December have continued to decline, reaching 82% from around 90% last week.

Sterling is gaining against the Euro as France’s fiscal difficulties weigh on the single currency, although it is losing ground against the Greenback.

Attention in the UK centres on the Autumn Budget. Chancellor Healey is expected to set out a sustainable budget that avoids unsettling the bond market while delivering on some of Andy Burnham’s government’s promises. The Financial Times reports that John Healey is preparing to announce a 4% increase for low-wage workers.

Wednesday’s Fed meeting is the next major event for traders, while the UK’s budget features on the domestic economic calendar.

GBP/USD Price Forecast: Sellers retain the near-term technical advantage

Trading at 1.3314 on the daily chart, GBP/USD retains a bearish near-term bias below the latest cluster of simple moving averages around 1.3396. A descending resistance trend line also runs close to that area. The pair has moved away from former trend-line resistance, now support at 1.3257, yet remains only slightly above it, suggesting that sellers retain control of the broader structure. At around 48, the 14-period Relative Strength Index indicates that momentum has eased towards neutral rather than supporting a strong rebound.

The convergence of the 50-, 100- and 200-day simple moving averages makes the 1.3396 area the first resistance zone. Beyond it, rising trend lines that previously provided support now form resistance near 1.3644 and 1.3823. Below the market, the broken trend-line level around 1.3257 offers the first significant support. A daily close beneath it would likely clear the way for a deeper retreat, extending the pair’s rejection from the substantial resistance band above.

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