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02.10.2026 01:11 PM
GBP/USD – Price Analysis and Forecast: Concerns About UK Fiscal Policy Weigh on the Pound

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On Friday, GBP/USD remained near yesterday's low and is trading slightly above 1.3200 amid consolidation in the US dollar. Traders are awaiting the release of the monthly US labor market data, which could provide a new impulse for the market.

Particular attention should be paid to the Nonfarm Payrolls (NFP) report, which will provide additional clues about the Federal Reserve's future policy direction amid declining expectations for an interest-rate hike in October. This data will be a key factor in shaping the dollar's short-term dynamics. Meanwhile, the US Dollar Index (DXY), which tracks the value of the US currency against a basket of other currencies, remains near a one-and-a-half-year high, as concerns about inflation driven by rising oil prices are limiting the pullback in US Treasury yields from multi-year highs.

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Persistent geopolitical uncertainty stemming from the confrontation between the United States and Iran is also supporting the dollar as a safe-haven asset. At the same time, the yield on 30-year UK government bonds has exceeded 6% for the first time since early 1998, intensifying concerns about fiscal policy ahead of the autumn budget scheduled for October 28.

This, in turn, is putting pressure on the pound, becoming another factor weighing on GBP/USD. Nevertheless, the potential for further declines is limited, as traders may refrain from opening large positions while awaiting important economic data.

From a technical perspective, GBP/USD maintains a bearish bias in the near term. The break below 1.3200 during overnight trading has created conditions for further declines and a retest of the current-year low of 1.3136, recorded in June. The next level is the round 1.3100 level. A break below this level would likely open the way for a continuation of the downward trend observed over the past month.

As for a potential recovery, any attempts to move higher are likely to face strong resistance before the 1.3300 level. A sustained break above this barrier would be required to confirm the scenario of further growth. In that case, GBP/USD could attempt to test 1.3335. However, as the oscillators are negative, the bears have the advantage.

Irina Yanina,
Analytical expert of InstaForex
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