Solid Gold Berjangka – The pound sterling weakened against the US dollar during Wednesday’s Asian trading session, with the GBP/USD pair falling toward the 1.3300 level. Pressure on the pound has emerged as investors adopt a cautious stance ahead of the UK budget announcement and the Federal Reserve’s interest rate decision, both scheduled for today.
UK Chancellor John Healey is set to present his first budget amid pressure to alleviate the cost-of-living burden on the public while simultaneously providing support to the business sector. However, the government’s fiscal space remains relatively constrained due to high borrowing costs and the impact of significant tax hikes implemented previously.
From the United States, the Federal Reserve is expected to keep interest rates within the 3.75%–4.00% range. The market will also be closely monitoring statements from Fed official Kevin Warsh for clues regarding potential policy shifts in December. A more hawkish tone could strengthen the US dollar and exert further pressure on the GBP/USD pair.
From a technical perspective, the pound’s weakness has pushed the GBP/USD pair back toward the 1.3300 support area, following a break below minor support near 1.3350–1.3355. Should the pressure persist, the 1.3250–1.3275 range could become the next target, although buying interest on dips may help limit further declines.
Meanwhile, commentary from the Bank of England (BoE) suggests that wage pressures in the UK remain elevated, with the process of wage disinflation beginning to stall. This situation may lead the BoE to exercise greater caution regarding interest rate cuts, potentially providing support for the pound in the medium term, even as the US dollar continues to dominate in the short term. (srh)