British Pound clings to 1.3300 on UK budget ahead of Fed’s decision

The Pound Sterling retreats for the fourth consecutive day versus the US Dollar, down 0.02% as investors brace for the Federal Reserve policy decision and also digest the UK’s Autumn Budget. The GBP/USD trades near 1.3300, barely unchanged.

GBP/USD weighed as investors await the Fed decision despite Britain's fiscal discipline pledges

UK finance minister John Healey presented the budget “built on fiscal discipline which matches immediate action today, with clear direction for the future.” He said that the Office for Budget Responsibility (OBR) revealed that the war in the Middle East complicates forecasts, and that this budget “puts us on track to eliminate the current budget deficit and get Britain’s finances into the black within 3 years.”

This barely moved GBP/USD, which remained under pressure amid rising tensions in the Middle East.

In the US, the focus is on the Federal Reserve’s monetary policy decision. Money markets expect a nearly 91% chance that Warsh and company will hold rates unchanged, though eyes will be on his press conference and the guidance he could provide on the foreseeable future.

Towards the end of the year, the swaps market had priced in 21 basis points of tightening, or an 85% chance that the Fed will hike in the December meeting, according to Prime Terminal.

Along with the Fed’s decision, the release of US Gross Domestic Product (GDP) figures for Q3, and the Fed’s preferred inflation gauge, the Core PCE, could influence the GBP/USD direction towards the end of the month.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3303, holding below a dense cluster of simple moving averages around 1.3390 and sustaining a bearish near-term bias. The pair has slipped under the upward trend structure, with the latest touch on the former support line near 1.3360 now acting as resistance, while a downward-sloping trend line that previously capped price around 1.3255 has turned into nearby support. The Relative Strength Index (14) at about 48 sits just under the neutral midline, hinting at waning bullish momentum and leaving the downside exposed unless buyers can reclaim the overhead technical barriers.

On the topside, initial resistance is seen at the broken upward trend line around 1.3360, followed by a key confluence zone where the 50-, 100- and 200-day simple moving averages cluster near 1.3390; a daily close above this area would ease immediate downside pressure. Further up, a descending trend line near 1.3544 precedes another structural cap from an older rising trend line around 1.3606. On the downside, first support is provided by the repurposed downward trend line around 1.3255; a break below this floor would open the way for a deeper pullback toward previous lows not shown by the current indicator set.