The British Pound (GBP) has seen increased volatility recently, particularly in light of approaching economic events, including the UK’s autumn budget scheduled for November 26. Analysts note that the pound firmed briefly amid reports that Chancellor Rachel Reeves would avoid a tax raid on banks, providing a momentary boost for Sterling. However, mixed sentiment persists due to growing concerns regarding potential tax hikes and interest rate cuts by the Bank of England (BoE), which have pushed the GBP toward multi-month lows.
Recent forecasts indicate that the GBP is trading at 7-day highs near 1.3165 against the US dollar, though this remains 1.4% below its three-month average of 1.3347. The GBP's stability is notable, with a trading range of just 4.8% over that period. Meanwhile, against the Euro, the GBP is at 14-day highs near 1.1381, slightly below its three-month average, maintaining a tight range of 2.3%. The GBP has also performed well against the Japanese yen, sitting at 205.6—2.0% above its three-month average—indicating broader strength in this pair.
Despite these recent positions, experts warn that if the autumn budget does not meet market expectations, the pound could experience significant downward pressure. With the BoE meeting looming, where rates are anticipated to remain steady at 4.00%, the outlook suggests a potential reduction in interest rates later in the year, diminishing the pound's appeal.
Overall, traders should prepare for potential sharp movements as the market digests the outcomes of the budget and other economic indicators in the coming weeks.
