**Pound to Dollar Week Ahead Forecast: GBP/USD 1.30? UK Budget Anxiety Grows**
*Credit: Original article by James Skinner, ExchangeRates.org.uk*
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The British Pound (GBP) faces a complicated road ahead against the US Dollar (USD) as investors brace for significant UK fiscal news and a shifting international economic climate. With rising budget uncertainties dominating domestic headlines and persistent global rate differentials holding sway, the GBP/USD exchange rate may soon challenge the psychologically significant 1.30 mark. This comprehensive forecast explores the key drivers influencing the Pound to Dollar pair as we move into the crucial week ahead.
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**Summary of Recent GBP/USD Performance**
The beginning of November saw the Pound-to-Dollar exchange rate trading in the 1.28–1.29 range, rebounding from a late-October pullback. Sterling’s resurgence was supported by broad-based Dollar weakness resulting from dovish signals at the recent Federal Reserve policy meeting and softer US data, which calmed expectations for further aggressive Fed tightening.
– Bank of England (BoE) kept the UK base rate on hold for the second consecutive meeting.
– The US Federal Reserve also opted to pause hikes, and Fed Chair Powell’s dovish comments triggered Dollar selling.
– UK GDP and labor market figures provided only modest support to Sterling, failing to shift the outlook decisively.
Amid this relative calm, fresh volatility could arrive as attention turns to the UK’s fiscal policy, Bank of England guidance, and evolving US economic indicators.
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**1. GBP/USD Outlook: Can Sterling Reach 1.30?**
The 1.30 handle offers a major technical resistance level for the GBP/USD pair. The last time the pair traded consistently above this level was in July 2023, after which Dollar strength and a weaker UK narrative drove the rate lower. For the Pound to establish a foothold above 1.30, several interrelated factors must align.
**Key Considerations for Sterling Strength:**
– Decisively dovish pivot by the Federal Reserve, further reducing US rate differentials.
– UK Budget and fiscal response: investor perception of fiscal responsibility and growth strategies.
– Improvement in UK growth data or a hawkish surprise from the Bank of England.
– Persistent risk-on market sentiment reducing demand for safe-haven Dollar assets.
While the path to 1.30 remains technically open, substantial fiscal or economic missteps would likely see the Pound pull back toward support levels near 1.26–1.27.
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**2. The UK Budget and Fiscal Policy Risks**
A central risk factor hanging over Sterling is the anticipation of the UK Chancellor’s Autumn Statement. Scheduled for mid-November, this budget update will set the tone for fiscal priorities heading into 2025 and possibly a General Election year. Anxiety is rising as markets assess whether Chancellor Jeremy Hunt can reconcile political pressure for tax cuts or higher public spending with the need for fiscal prudence.
**Key Budget Questions:**
– Will the Chancellor comply with fiscal rules, especially on public debt sustainability?
– Can markets be reassured amid concerns over UK government borrowing and the OBR (Office for Budget Responsibility) projections?
– Is there room for meaningful tax cuts, given high inflation and persistent budget deficits?
If markets perceive the government is veering toward unfunded giveaways or populist pensions/tax policies, Sterling could swiftly lose ground. Conversely, a credible, disciplined budget would provide some support.
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**3. Bank of England: Cautious But Watching Inflation**
The Bank of England’s November policy decision left rates unchanged at 5.25 percent, but Governor Andrew Bailey and colleagues continue to walk a fine line between fighting inflation and avoiding recession. While headline inflation in the UK has retreated from 40-year highs, it remains well above the BoE’s two percent target.
**Bank of England Watch Points:**
– Will talk shift from possible further hikes to discussing eventual rate cuts?
– Does the Monetary Policy Committee see
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