GBP/USD Slips to 1.3567 as UK Fiscal Uncertainty Meets Dollar Strength
The Pound drops on Reeves’ £4.8B welfare expansion, while safe-haven flows and Trump’s trade moves fuel further USD gains. Bearish structure targets 1.3502 and 1.3456 | That's TradingNEWS
GBP/USD Crashes to 1.3567 as UK Budget Blowout Triggers Panic
The British Pound collapsed to 1.3567 against the US Dollar as markets reacted sharply to Chancellor Rachel Reeves' massive £4.8 billion Universal Credit expansion. The move—seen as breaching Labour’s fiscal rules—has ignited speculation of Autumn tax hikes and sent risk premiums soaring on UK assets. Sterling has now lost nearly 90 pips from last week’s high at 1.3650, with traders pricing in a bearish turn in fiscal policy. The bond market is flashing warning signals as investors demand clarity on how the government will finance rising expenditures.
Sterling Under Siege as Fiscal Clarity Evaporates
Reeves' announcement has left investors fearing a combination of tax hikes and borrowing spikes. Barclays flagged the government’s refusal to confirm offsetting revenue measures, stoking fears of fiscal slippage. This comes as the Bank of England is expected to cut rates by August, pressuring GBP/USD even further. Without decisive action from policymakers, downside risk intensifies as sentiment turns toxic.
GBP/USD Slides Through 1.3593 Support as Triangle Breakdown Unfolds
GBP/USD has now pierced critical support at 1.3593, violating the floor of a descending triangle pattern. Technical signals confirm bearish strength: the 50-period SMA at 1.3633 acts as firm resistance, and RSI at 35.76 suggests momentum is firmly with the sellers. If price closes below 1.3540, a rapid drop toward 1.3502, and potentially 1.3456, appears likely.
Trump’s Trade Blitz Fuels Dollar Rally as Safe-Haven Demand Soars
The US Dollar surged in parallel, bolstered by geopolitical tension and trade war revival. Former President Trump’s tariff barrage on 14 nations, including Japan and South Korea, has shocked global markets. Treasury Secretary Scott Bessent’s announcement of imminent new trade deals only intensified demand for the Dollar. Risk aversion is now a dominant theme, keeping the greenback bid across the board.
Fed Minutes and Bond Yields Loom Large for GBP/USD Path
Markets now turn to the FOMC Minutes and the 10-year US bond auction. A hawkish Fed tone could send yields even higher, strengthening USD and dragging GBP/USD below 1.3540. With bond markets already pricing in risk, the next catalyst could cement bearish continuation for the pair.
Elliott Wave Flags Possible Short-Term Relief Rally
Despite the pressure, Elliott Wave signals suggest GBP/USD is inside orange wave 3 of navy blue wave 5, hinting at a temporary correction via orange wave 4. This would set up a potential bounce from the 1.3500–1.3520 zone. However, any upside will likely stall below 1.3620–1.3640, leaving the dominant bearish trend intact.
GBP/USD Trade Strategy: Short Bias Prevails Below Key Moving Average
As long as GBP/USD remains below the 50-period SMA, bears remain in control. Current price action favors shorts below 1.3540, with clear targets at 1.3502 and 1.3456, and a protective stop near 1.3595. Resistance aligns at 1.3593, 1.3633, and 1.3643.
GBP/USD Outlook: Bearish Unless Budget Shock Reverses
Unless the UK government quickly restores market confidence with a credible fiscal roadmap, GBP/USD faces deepening losses. The pair is trading on edge, technically vulnerable and fundamentally pressured. All signs point to continued downside—Hold if in, Sell on bounces, Buy only on confirmed reversal above 1.3643.
