– Written by


Frank Davies

STORY LINK GBP to USD Forecast: Pound Sterling Nears Weekly High on Dovish Fed Signals

The Pound-to-Dollar exchange rate (GBP/USD) edged toward a one-week high on Tuesday, supported by renewed speculation that the Federal Reserve could cut interest rates again in December.

At the time of writing, GBP/USD was trading around $1.3153, up almost 0.4% from Tuesday’s opening levels.

The US Dollar (USD) lost traction on Tuesday amid rising expectations for a December Fed rate cut, with the probability climbing to around 85%.

This marked a significant reversal from the end of last week, when hawkish Federal Reserve minutes pushed the chances of a cut down to just 25%.

The shift in sentiment followed the latest US retail sales report, which showed September’s growth slowing to its weakest pace since May.

Further downward pressure came from Fed policymaker Stephen Miran, who suggested the US economy is “calling for large interest rate cuts,” reinforcing the increasingly dovish tone in markets.

The Pound (GBP) remained muted on Tuesday as investors adopted a cautious stance ahead of Chancellor Rachel Reeves’s first autumn budget, set to be unveiled on Wednesday.

Reeves is expected to detail measures to close an estimated £20bn fiscal gap and potentially expand fiscal space compared to last year’s limited headroom.

With income tax rises effectively ruled out, analysts widely expect a patchwork of smaller tax increases and targeted spending reductions — an approach that has stirred concerns over the potential impact on household finances and business investment.

At the same time, markets continue to weigh how these fiscal plans may influence upcoming Bank of England (BoE) decisions, with considerable speculation that policymakers could deliver another rate cut in December.

GBP/USD Forecast: All Eyes on UK Budget

Looking ahead, Wednesday’s budget announcement is likely to dominate movement in the Pound US Dollar exchange rate.

Should Reeves unveil a package that raises concerns over economic growth or appears to increase pressure on the BoE to accelerate its cutting cycle, the Pound could face renewed losses.

Conversely, a budget seen as balanced, credible, and supportive of long-term stability may offer Sterling a lift after several turbulent weeks.

Meanwhile, USD investors will be watching the latest US durable goods orders data, with expectations that a slowdown in orders could place fresh pressure on the Dollar and deepen support for Fed rate-cut speculation

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EUR/USD Technical Analysis

The euro continues to see trouble just above, and ultimately, as the market’s rallying continues to bring in selling pressure. The 50-day EMA is sitting above and is offering a significant amount of resistance. The downtrend line, of course, comes back into the picture. All things being equal, this is a market that I think continues to be noisy, and I do think it continues to favor the US dollar over the longer term, as the US dollar is starting to see a lot of inflows and there are a lot of concerns about the overall global economy. All things being equal, the 1.14 level underneath is, I think, your target. It is not until we break above the 1.17 level that we start to look at the possibility of a continuation of the previous uptrend.

GBP/USD Technical Analysis

The British pound initially tried to rally during the trading session on Tuesday as well, but then gave back gains and showed a potential shooting star, and therefore, I think we have a real possibility of a drop from here to reach down to the 1.130 level. The 50-day EMA looks as if it is going to cross below the 200-day EMA, kicking off the so-called death cross. The 1.32 level above is significant resistance and 1.30 underneath is support, so we are in a range, but this could, and I believe is going to be, a continuation pattern. So we will just have to see how long it takes for the market to make its next move.

Created on November 25, 2025

• The British pound saw a mild rally as the US dollar weakened, but broader sentiment remains negative.
• Key resistance at 1.32 could reinforce dollar strength, while technical signals point to potential further downside toward 1.2750.

The British pound rallied slightly during the trading session on Monday as we saw the US dollar lose some strength across the board. Ultimately, I think this is a pair that still sees a lot of negativity out there, and given enough time, we will likely see that end up being a selling opportunity on signs of exhaustion.

Key Levels and Technical Signals

This will be especially true near the 1.32 level, an area that previously had been significant support and now should be resistance. Rallies at this point in time that do show signs of exhaustion will only confirm the US dollar strength that we have seen across the board. And it’s worth noting that the Bank of England recently chose not to cut rates but came awfully close when you look at the vote count.

I think it is probably only a matter of time if the English cut rates and therefore the British pound will continue to have a little bit of an overhang. If it were to break above the 1.32 level, then I think the British pound could start to change its overall attitude. I don’t even know if that is necessarily the end of the downtrend. I just think it could bring in more volatility. It is worth noting that the 50-day EMA is now threatening to break down below the 200-day EMA, kicking off the so-called death cross. And that, of course, is something that some longer-term traders will pay attention to as a potential negative sign.

If we break down below the 1.30 level, then there is a swing low that I would be watching for a potential target in the form of 1.2750 underneath for a profit target on that move.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.