GBPUSD Points to Further Downside As it Fails to Reclaim 1.30 Again

Yesterday GBPUSD retested the 1.30 level from below, as the USD was retreating on balanced presidential polls, but buyers failed to push above this major level which was a signal that the larger downtrend would resume. Later in the US session sellers returned and this pair tumbled toward 1.29 again, which suggests further downside pressure, unless US elections change the situation and ruin the trend.

The UK economy continued to weaken in October, and the government introduced a new budget featuring a significant £40 billion tax increase. This led to a downward trend for the GBP/USD , with the pound losing 6 cents and falling to the 1.29840 level last week. While UK officials argue that the tax hikes are necessary to address economic challenges, the additional tax burden on businesses and consumers may place further pressure on the pound.

Despite this, the pound found some support as investors awaited the Bank of England’s policy decision on Thursday, where another 25 basis point rate cut was widely expected. This morning, the dollar softened, which initially boosted the pound, opening with a 50-pip bullish gap during the Asian session.

GBP/USD Chart H4 – The 100 SMA Aided Sellers at 1.30

The GBP/USD pair then climbed to an intraday high of $1.2999 in European trading, aided by a broad decline in the dollar ahead of the U.S. presidential election. However, the 100 SMA (green line) acted as resistance, halting GBP buyers from breaking the critical 1.30 level, leading to a subsequent drop during the U.S. trading session. Additionally, the UK BRC Retail Sales Monitor data was released last night.

British Retail Consortium (BRC) and Barclaycard UK October Spending Overview

• BRC Total Sales: +0.6% year-over-year, the weakest growth since July (September: +2.0%).
  • Like-for-Like Sales: +0.3% y/y (prior: +1.7%).
• Barclaycard Consumer Spending: +0.7% y/y, also marking the slowest growth since July (prior: +1.2%).

Key Factors Affecting October Sales

• Budget Uncertainty: Consumers delayed purchases ahead of Black Friday.
• Later Half-Term Break: Shifted consumer spending patterns for the month.
• October 30 Budget: Targeted tax increases at businesses, potentially boosting consumer confidence by sparing household wage taxes.
• Household Energy Costs: A 10% rise in the energy price cap added pressure on budgets.

Spending Trends

• Essential Spending: Fell by 2.2%, primarily due to reduced supermarket spending.
• Non-Essential Spending: Increased by 2.1%, largely driven by higher demand for concert tickets.
• Outlook: Although inflation remains a concern, easing pressures and improved consumer sentiment may support spending growth in the coming months.

GBP/USD Live Chart

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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