The Pound Sterling (GBP) extended its decline against the US Dollar (USD) for a fourth consecutive session on Friday, trading near a fresh six-month low of 1.3116 reached on Thursday. The pair remains pressured by a stronger Greenback, as traders scale back expectations for additional Federal Reserve rate cuts and sentiment improves on hopes of a US–China trade deal.
At the time of writing, the US Dollar Index (DXY) — which measures the Greenback’s performance against six major currencies — was holding firm near an almost three-month high of 99.70 touched on Thursday.
Fed Caution Supports the Dollar
The USD continues to gain ground after Federal Reserve Chair Jerome Powell signaled a cautious stance on further easing. Following the Fed’s decision on Wednesday to lower interest rates by 25 basis points (bps) to the 3.75%–4.00% range, Powell said another cut in December was “far from assured.”
According to the CME FedWatch Tool, the probability of a December rate cut has fallen to 72.8%, down from 91.1% a week earlier. The hawkish shift has driven US Treasury yields higher, further supporting the Dollar.
Adding to optimism, US Treasury Secretary Scott Bessent confirmed in an interview with Fox Business Network that Washington and Beijing have finalized the “Kuala Lumpur Agreement”, with both sides expected to sign the deal as early as next week, according to Reuters.
Traders now turn their attention to remarks from Fed officials Raphael Bostic (Atlanta) and Beth Hammack (Cleveland) later Friday for fresh policy cues.
Pound Under Pressure Amid UK Fiscal Concerns
The British Pound remains under strain amid growing concerns about the UK’s fiscal outlook. Investors worry that Chancellor Rachel Reeves may face tough choices in her upcoming November budget, as slower productivity growth and widening fiscal gaps could force her to raise taxes or increase borrowing.
The Office for Budget Responsibility (OBR) recently projected that UK productivity will decline by 0.3%, potentially widening the budget deficit by £21 billion by 2029–2030. Meanwhile, the Institute for Fiscal Studies (IFS) estimates a £22 billion shortfall, warning that Reeves may have to break Labour’s election pledges not to raise income tax, National Insurance (NI), or VAT, or to borrow for day-to-day spending.
Such measures could further dampen household confidence and weigh on GBP sentiment.
Weekly Currency Performance
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF |
|---|---|---|---|---|---|---|---|
| Change (%) | +0.57 | +1.44 | +0.79 | 0.00 | –0.03 | +0.97 | +0.72 |
The British Pound was the weakest major currency this week, reflecting its underperformance against a broadly stronger US Dollar.
Technical Outlook: GBP/USD Eyes 1.3000 Support
Technically, GBP/USD remains in a bearish trend, trading below the 200-day Exponential Moving Average (EMA) at 1.3270. The 14-day Relative Strength Index (RSI) has dropped below 40.00, signaling renewed downside momentum.
On the downside, the 1.3000 psychological level is expected to serve as a key support zone. Resistance is seen near 1.3370, Tuesday’s high, which may cap any short-term recovery attempts.
Summary
A combination of hawkish Fed signals, rising US yields, and UK fiscal challenges continues to weigh on the Pound Sterling. Unless domestic fiscal clarity or stronger economic data emerge, the GBP/USD pair could remain under pressure, with risks tilted toward a further slide toward 1.3000 in the near term.
