GBP/USD opens the final week of October near a one-month high, but mixed UK data leave the pound exposed. This week's Budget and the Bank of England meeting on 5 November will shape whether the gains hold. Technically, the pair appears vulnerable to a decline.
GBP/USD starts the week at 1.3369, with the pound remaining near its highest level in a month. Investors are weighing a mixed set of macroeconomic data ahead of the Budget and the central bank meeting.
Mixed UK data pull the pound both ways
Preliminary PMIs showed UK private sector activity accelerating to its fastest pace since February, with manufacturing and services both beating expectations. However, September retail sales fell more sharply than forecast. Consumer confidence also recorded its steepest monthly drop since the pandemic, amid cost-of-living pressures and concerns related to the Middle East conflict.
Stronger inflation data released earlier this week led markets to price in at least three 25-basis-point rate hikes by April 2027, with the first potentially coming on 5 November. Chancellor John Healey is expected to emphasise fiscal discipline in this week's Budget. The pound will therefore be caught between expectations of tighter Bank of England policy and weak consumer demand.
Sellers hold the advantage below 1.3417
On the four-hour chart, the market completed its upward correction at the 1.3417 resistance level and turned down, which marks the start of a new downward wave. The nearest resistance is the 1.3406–1.3417 zone, and sellers retain the advantage while the price stays below it.
The analysis expects a decline towards 1.3340 today, then a technical correction towards 1.3355. A continuation towards 1.3240 is then anticipated. A break below that support would open the way towards 1.3060. The MACD supports the downward move, as its signal line is above zero but turning down from local highs.
On the hourly chart, the market tested resistance at 1.3406 and returned to support at 1.3370. The Stochastic oscillator has turned down from the overbought area and crossed below 80. An alternative scenario envisages consolidation above 1.3417, which would temporarily invalidate the downside scenario.
Source: ActionForex
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