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GBP/USD advanced around 0.6% on Tuesday, reaching 1.3181, buoyed by broad US Dollar weakness and a quiet UK economic calendar ahead of the Autumn Budget. Investors are closely watching the Pound’s movements as it approaches the 1.3200 milestone.
Soft US economic data fueled expectations of a potential Federal Reserve rate cut in December. The Producer Price Index (PPI) for September rose slightly year-on-year, while Core PPI dipped below forecasts, signaling subdued inflation pressures. Meanwhile, US Retail Sales increased modestly, and consumer confidence fell sharply, reflecting growing household pessimism amid ongoing government disruptions.
Recent comments from Federal Reserve officials have reinforced these expectations. Neel Kashkari, Minneapolis Fed President, highlighted the economic challenges faced by households, while John Williams, New York Fed President, and Fed Governor Christopher Waller contributed dovish remarks that boosted market expectations for a rate cut.
The upcoming UK Autumn Budget is also in focus, with the Chancellor expected to announce measures aimed at meeting fiscal targets, potentially involving significant tax adjustments.
From a technical perspective, GBP/USD remains downward biased, though a break above the recent swing high of 1.3215 could pave the way toward the 1.3300 level. Conversely, a drop below the 20-day average at 1.3130 may push the pair toward 1.3100.
This week, the British Pound has shown strength against several major currencies, particularly the Australian Dollar, reflecting broader Dollar weakness and market anticipation of policy moves on both sides of the Atlantic.
