**GBP/USD Declines Toward 1.3150 as US Government Funding Deal Emerges**
*Citing original reporting by VT Markets Newsroom.*
The British pound found itself under pressure and slid toward the 1.3150 level against the US dollar in recent trading sessions. This movement comes as the US Congress reached an eleventh-hour deal to fund the government, reducing immediate concerns of a federal government shutdown. The risk mood improved slightly on this news, with markets responding across the board—yet the pound still struggled. This article explores the driving forces behind the GBP/USD decline, the market responses to the US government funding agreement, and the broader factors influencing both GBP and USD performance.
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## The US Government Funding Deal: Immediate Context
Negotiations in the US Congress over government funding have been closely watched by forex traders, as a government shutdown could have had substantial consequences for risk sentiment, the US dollar, and global markets. Over the weekend, lawmakers finally passed a stopgap funding bill that will keep the government open for 45 days, averting the potential disruption.
**Consequences of the deal:**
– Averted an imminent government shutdown, alleviating volatility in risk assets.
– Boosted risk-on sentiment in the early trading session as markets reopened post-weekend.
– Led to a mild recovery in US Treasury yields as demand for safety moderated.
With the deal in place, the focus for traders shifted back to macroeconomic fundamentals, policy divergence, and near-term economic data releases.
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## GBP/USD Price Action: Pressures Mount
The GBP/USD pair started the week on a defensive footing, continuing its downward trajectory below the 1.3200 zone. The pair edged toward the 1.3150 area, showing signs of persistent bearish sentiment.
**Key drivers of the GBP decline include:**
– Diminished expectations for further Bank of England tightening following recent UK data.
– Renewed confidence in the US dollar after the funding bill was reached.
– Technical selling after the pair slipped below important support levels.
### Technical View: Key Levels in Focus
The chart signals an ongoing downtrend following recent failures to reclaim the 1.3250 and 1.3200 hurdles.
– Immediate support is seen around 1.3150, with further downside risks toward 1.3100.
– Resistance levels are noted at 1.3200 and 1.3250. A break above these would be required for sentiment to become more constructive.
Momentum oscillators such as the RSI are heading lower, but are not yet near oversold territory, suggesting scope for continued weakness in the short term.
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## UK Macro Data: A Drag on the Pound
Economic data from the UK has continued to show signs of weakness, further complicating the picture for the pound.
**Recent UK data highlights:**
– GDP growth has stagnated, with the British economy barely expanding in recent months.
– Inflation remains stubbornly high, but there are indications it has begun to retreat from peak levels, reducing the need for further aggressive rate hikes by the Bank of England.
– Consumer confidence remains fragile, and business surveys have pointed to a slowdown in both the manufacturing and services sectors.
Against this backdrop, the Bank of England faces a delicate balancing act. The central bank recently opted to keep rates unchanged, a shift from its earlier hawkish stance. This move, combined with weakening data, has weighed on sterling as markets pare back expectations for further tightening.
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## US Dollar Recovers as Risks Ease
The US dollar stabilized and mildly strengthened as the funding crisis was averted. With no shutdown, global investors rotated out of safe havens like the Japanese yen and into the greenback, which remains underpinned by robust Treasury yields.
**Supporting factors for the US dollar:**
– The US economy continues to outperform, with recent data showing resilience in employment, consumption, and core inflation metrics.
– The Federal Reserve maintains a hawkish bias, signaling that interest rates may
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