The US dollar continues to strengthen, the British pound has broken down and is undergoing a short-term correction, but is expected to maintain a downward trend in the medium term.
2025-11-05 13:56:08
GBP/USD rebounded slightly to around 1.3025 in early European trading. However, the pound's upside potential is under pressure from the upcoming UK autumn budget.
Chancellor of the Exchequer Rachel Reeves made it clear on Tuesday that the budget will include a wide range of tax measures, expected to involve more than 100 possible tax and spending options, with a focus on high-income groups.
Reeves emphasized that its fiscal rules are "fixed," meaning that market expectations of tax increases may limit further gains in the pound in the short term. The UK's autumn budget will be announced on November 26th, and GBP/USD may continue to be under pressure until then.
Meanwhile, the Bank of England (BoE) is about to hold its interest rate meeting, and the market widely expects it to keep the key interest rate unchanged at 4.0%. However, due to the uncertainty surrounding fiscal policy, some believe that the BoE may wait and see the effects of tax reform before deciding on the direction of interest rates.
This uncertainty further increases the short-term volatility risk for GBP/USD. Regarding the US dollar, the record-breaking US government shutdown has nearly disrupted the flow of macroeconomic data. The market will focus on the October ADP non-farm payrolls and the ISM services PMI.
The ADP non-farm payrolls report is expected to show an increase of 25,000 jobs, after previously recording a decrease of 32,000 jobs. Stronger-than-expected data would boost the US dollar, creating resistance for GBP/USD.
From a technical perspective, GBP/USD maintains a mild bullish structure in the short term, but may face resistance at 1.3080. Support lies around 1.2980; a break below this level could lead to a short-term pullback in the pound.
Overall, the market in the short term will be influenced by the dollar's performance, UK fiscal policy, and the release of US economic data.
Editor's Note:
The recent movement of GBP/USD has been primarily driven by the continued strength of the US dollar, which has pressured the exchange rate lower. While there has been a mild rebound in the short term, upside potential is limited due to the potential tax increases from the upcoming autumn budget announced by UK Chancellor Reeves, as well as the impact of the US government shutdown and upcoming economic data releases.
If the budget clearly indicates tax increases or US economic data is stronger than expected, the pound may come under pressure and fall. Positions should be adjusted flexibly based on the dollar's trend, UK fiscal policy, and US economic data.
Chancellor of the Exchequer Rachel Reeves made it clear on Tuesday that the budget will include a wide range of tax measures, expected to involve more than 100 possible tax and spending options, with a focus on high-income groups.
Reeves emphasized that its fiscal rules are "fixed," meaning that market expectations of tax increases may limit further gains in the pound in the short term. The UK's autumn budget will be announced on November 26th, and GBP/USD may continue to be under pressure until then.
Meanwhile, the Bank of England (BoE) is about to hold its interest rate meeting, and the market widely expects it to keep the key interest rate unchanged at 4.0%. However, due to the uncertainty surrounding fiscal policy, some believe that the BoE may wait and see the effects of tax reform before deciding on the direction of interest rates.
This uncertainty further increases the short-term volatility risk for GBP/USD. Regarding the US dollar, the record-breaking US government shutdown has nearly disrupted the flow of macroeconomic data. The market will focus on the October ADP non-farm payrolls and the ISM services PMI.
The ADP non-farm payrolls report is expected to show an increase of 25,000 jobs, after previously recording a decrease of 32,000 jobs. Stronger-than-expected data would boost the US dollar, creating resistance for GBP/USD.
From a technical perspective, GBP/USD maintains a mild bullish structure in the short term, but may face resistance at 1.3080. Support lies around 1.2980; a break below this level could lead to a short-term pullback in the pound.
Overall, the market in the short term will be influenced by the dollar's performance, UK fiscal policy, and the release of US economic data.
Editor's Note:
The recent movement of GBP/USD has been primarily driven by the continued strength of the US dollar, which has pressured the exchange rate lower. While there has been a mild rebound in the short term, upside potential is limited due to the potential tax increases from the upcoming autumn budget announced by UK Chancellor Reeves, as well as the impact of the US government shutdown and upcoming economic data releases.
If the budget clearly indicates tax increases or US economic data is stronger than expected, the pound may come under pressure and fall. Positions should be adjusted flexibly based on the dollar's trend, UK fiscal policy, and US economic data.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
