GBP/USD Price Forecast - Pound Sterling Rallies to 1.33 Against Dollar as Rate Cut Bets Dominate Pairs Outlook

Gbp/Usd Price Surges As Dollar Weakens And Uk Policy Boosts Market Confidence

The GBP/USD pair climbed toward 1.33, marking its strongest weekly close in several months. The advance was driven by a softer U.S. dollar, falling Treasury yields, and stronger sentiment following the UK Autumn Budget. Investors remain alert to the coming policy decisions from both the Federal Reserve and the Bank of England (BoE), which could reshape the currency landscape as the year ends.

U.S. Dollar Decline Pushes Gbp/Usd Higher

The U.S. dollar (USD) continued to weaken after lackluster macroeconomic data and dovish comments from the Federal Reserve. Futures markets now price an 87% chance of a 25-basis-point rate cut in December, up from 40% the previous week. As the 10-year Treasury yield dropped below 4.1%, investors reduced dollar exposure, allowing GBP/USD (FX:GBPUSD) to break decisively above 1.3200, a level that previously limited gains. The move reflected a broader global rotation into risk assets as traders anticipate multiple Fed cuts through 2026, eroding the dollar’s rate advantage.

Uk Fiscal Policy Provides Short-Term Support For The Pound

The UK Autumn Budget presented by Chancellor Rachel Reeves gave the pound a significant short-term lift. The government introduced a fiscal buffer worth £22 billion, calming gilt markets and easing concerns over fiscal discipline. 10-year gilt yields fell by around 15 basis points, supporting GBP/USD as traders welcomed the absence of new tax hikes. However, analysts caution that the benefits could fade since most tax revenue gains are backloaded until after 2029, leaving structural weaknesses in productivity and investment unresolved.

Bank Of England Signals Dovish Turn Amid Cooling Inflation

The BoE faces growing pressure to ease policy as inflation slows and household demand weakens. Markets now price a 70% probability of a rate cut in December, following a steady decline in inflation toward 3.8%. Governor Andrew Bailey stated that disinflation progress remains on track, with wage growth moderating and consumer data pointing to weaker momentum. The narrowing rate differential between the GBP and USD is now a key factor supporting GBP/USD, though stagnant UK GDP growth of around 0.2% quarterly continues to weigh on confidence.

Technical Structure: Cable Approaches Resistance At 1.33

From a technical standpoint, GBP/USD remains in an uptrend but is approaching major resistance near 1.3330. The pair trades comfortably above the 50-day (1.3140) and 100-day (1.3080) moving averages, confirming bullish control. A breakout above 1.3330 would expose the next resistance at 1.3370, while strong support lies around 1.3080. The RSI reading near 59 shows slight overextension, suggesting possible consolidation before another move higher.

U.S. Economic Data Will Drive Near-Term Volatility

Key U.S. reports including the ISM Manufacturing and Services PMIs, ADP Employment, and JOLTS Job Openings will shape short-term direction. Weak readings could extend dollar losses and push GBP/USD toward 1.3350, while stronger data could prompt a correction toward 1.3120. In the UK, the Financial Stability Report and final Services PMI will influence market expectations for the BoE’s December meeting.

Institutional Outlook: Split Projections On Gbp/Usd Trajectory

Major institutions remain divided on the pair’s next move.

• Standard Chartered projects GBP/USD rising to 1.34, supported by a December Fed rate cut.

• Rabobank expects a decline toward 1.30, citing slowing growth and weak productivity.

• FX Empire highlights resistance near 1.337, aligning with Fibonacci retracement levels, but warns of exhaustion if price fails to close above 1.3330.

Sentiment And Positioning: Pound Shorts Cover As Dxy Slides Below 103.5

The U.S. Dollar Index (DXY) fell below 103.5, triggering significant short-covering in the pound. CFTC data shows a 14% reduction in net short GBP positions over the past two weeks, reflecting improved sentiment. The move, however, is largely speculative, driven more by expectations of rate divergence than by confirmed central bank actions. Sustained momentum will depend on December policy decisions from both the Fed and the BoE.

Forecast And Risk Scenario For Gbp/Usd

The medium-term outlook points toward further gains, with GBP/USD potentially testing 1.34 if dollar weakness persists and UK yields remain steady. Failure to break 1.3330–1.3350 could trigger a pullback to 1.3050, near the lower end of the ascending channel. A daily close below 1.3000 would invalidate the bullish setup and expose 1.2860 as the next target.

Final Outlook: Cautiously Bullish With Upside Target At 1.34

The bias remains cautiously bullish for GBP/USD, backed by softer U.S. yields, improved UK fiscal sentiment, and dollar weakness. The next resistance zone lies at 1.3370–1.34, while solid support remains at 1.3080. Unless U.S. data shows an unexpected rebound, the pair is likely to maintain upward momentum heading into Q1 2026.

Verdict: Buy GBP/USD (FX:GBPUSD) – Target 1.34, support at 1.3080, downside risk below 1.3000.

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