GBP – UK Budget Boosts Sterling

On Wednesday, UK Chancellor Rachel Reeves' much-anticipated budget address provided a larger-than-expected fiscal buffer, stabilizing the pound and keeping it high into Thursday. Reeves reiterated her commitment to maintaining strict control over public finances, and the increased fiscal buffer also reassured the UK bond market.

According to data released by the London Stock Exchange Group (LSEG) on Thursday, financial markets expect a greater than 90% probability of a 25 basis point rate cut by the Bank of England following its Monetary Policy Committee (MPC) meeting on December 18, with one or two further rate cuts expected in 2026.

Technically, the pound has been trading in a range of 1.30 to 1.32 against the dollar this month. The high of 1.3215 on November 13th is currently testing the top of this range; a clear breakout could lead to a double bottom pattern and further upward movement. Subsequent resistance levels to watch are the 50-day moving average at 1.3285 and 1.3370, with stronger resistance seen at the October 17 high of 1.3471 or even the 1.35 level. The supporting levels are seen at 1.32, followed by 1.3090. The psychological level of 1.30 is considered crucial, as it was narrowly held earlier in the month.

Forecasted range:
Resistance 1.3285 – 1.3370 – 1.3471 - 1.3500
Support 1.3200 - 1.3090 - 1.3000* – 1.2800

This Week's News Highlights:

27/11 Bank of England Green: Energy measures in the budget may help lower inflation expectations

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