GBP/USD Price Forecast: Can gains above 1.3350 offset the bearish bias below the 100-day SMA?

• Buying interest lifts GBP/USD towards 1.3380 during early European trade on Friday.
• Below the 100-day SMA, the pair’s outlook stays negative as RSI momentum remains bearish.
• The 1.3390-1.3400 zone presents the nearest resistance, while 1.3300 is the initial downside target in focus.

Gains in the British Pound (GBP) against the US Dollar (USD) keep GBP/USD in positive territory near 1.3380 in Friday’s early European session. Investors are assessing the UK Autumn Budget while awaiting the Bank of England’s (BoE) forthcoming decisions.

A timetable for lifting defence spending to 3% of Gross Domestic Product (GDP) has been outlined by the United Kingdom (UK). Finance Minister John Healey announced billions in aid for Ukraine, describing it as a “clear message to Moscow.” On Wednesday, Healey named 2030 as the target date for the 3% figure and reiterated the UK’s NATO commitment to reach 3.5% by 2035.

US inflation data matched market expectations on Thursday, with the Personal Consumption Expenditures (PCE) Price Index rising 0.5% in September after a previous increase of 0.3%. The figures were published by the Commerce Department’s Bureau of Economic Analysis.

At Wednesday’s October policy meeting, a 10-2 vote by the Federal Open Market Committee (FOMC) left the benchmark federal funds rate unchanged within the 3.75% to 4% range. Officials at the Federal Reserve (Fed) expressed hope that incoming data would guide their next decision.

According to the CME FedWatch tool, markets currently assign about a 74.9% probability to a US rate hike in December. As interest rates rise, so does the opportunity cost of owning non-yielding gold.

Does the UK budget leave the Pound, gilts and BoE outlook broadly unchanged?

The UK October 2026 Budget is “neutral for GBP and gilts,” in the assessment of Brown Brothers Harriman analysts, who observe that the government has “modestly increased fiscal tightening but plans to issue slightly more debt.” Their analysis points out that the “cyclically adjusted primary balance, which excludes interest costs and adjusts for the economic cycle, is projected to improve from a deficit of -0.3% of GDP in 2026/27 to a surplus of +0.5% in 2027/28.” The resulting shift represents “a fiscal drag of 0.8% of GDP, up from 0.6% projected in March,” although BBH warns that “the additional fiscal restraint is probably too modest to materially curb the nearly 125bps of BoE rate hikes implied over the next twelve months.” Turning to funding, the analysts highlight that “£250.6 billion of total gilt sales are planned for 2026/27,” a figure that is “roughly in line with expectations (around £249.6bn) and up £4.4bn from the £246.2bn planned in April.”

Could Greene’s wage inflation warning temper GBP rate-cut expectations?

A steady yet decidedly hawkish position, rather than a more aggressive shift, is indicated by Greene’s FXS Speechtracker score of 7.4/10, in line with the historical average. Wage disinflation has stalled above rates compatible with 2% inflation, according to the emphasis in her remarks. Combined with greater-than-expected economic resilience and a potential peak in labour market slack, this reinforces the case for caution on policy easing and offers modest support to GBP.

Resistance to rate cuts in the near term is underscored by the call to “proactively lean against” second-round inflation effects and the acknowledgement that these risks exceed earlier assessments. Forward-looking indicators suggesting pay growth nearer 3.5% support the assessment that inflationary pressures remain persistent. This keeps the Bank of England inclined towards a higher-for-longer stance, limiting GBP’s downside.

Technical Analysis: Can GBP/USD Shake Off Its Near-Term Bearish Bias?

With the 100-day simple moving average (SMA) restricting gains, GBP/USD sits just below it on the daily chart, leaving the near-term outlook cautiously bearish. Nevertheless, trading above the 20-day Bollinger middle band indicates underlying buying interest on declines. A Relative Strength Index (RSI) reading of 55.9 signals consistent but modest bullish momentum, insufficient so far to absorb the selling pressure immediately overhead.

The first upside hurdle lies in the 1.3390-1.3400 area, where the 100-day SMA meets the psychological level. Clearing this zone decisively could open the way towards the upper Bollinger band near 1.3435. A sustained move beyond that boundary would be required to reduce downward pressure.

Initial support is provided by the 20-day Bollinger middle band at 1.3300, followed by the October 27 low at 1.3272. Further down, the lower Bollinger band near 1.3165 marks the next support level; a deeper decline there would leave the pair exposed to a more substantial corrective phase.

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