Pound falls to 1.3290 as traders await Healey budget and Fed decision
GBP/USD slipped for a fourth straight session to around 1.3290 as markets braced for UK Finance Minister John Healey's first budget and the US Federal Reserve's rate decision, both due later Wednesday.
Healey is expected to unveil measures aimed at easing household living costs and supporting businesses, but his room to manoeuvre is limited. High government borrowing costs and the tax increases introduced by his predecessor, Rachel Reeves, leave little fiscal space for new spending.
Sterling’s slide also reflects broader dollar strength ahead of the Fed meeting. Policymakers are widely expected to hold the benchmark rate at 3.75%-4.0%, with the CME FedWatch tool pointing to a 92.8% probability of no change this week and an 84.4% chance of a cut in December. Traders will scrutinise comments from Fed Chair Kevin Warsh for signals on the path ahead.
Separately, demand for US Treasury bonds has softened as sentiment around artificial intelligence improves. Investors are looking to upcoming earnings from major technology firms for clues on AI-related demand, a trend that has helped offset safe-haven flows from the recent global tech sell-off.
On the charts, GBP/USD trades below both its nine-day and 50-day exponential moving averages, at 1.3323 and 1.3351 respectively, with the 14-day Relative Strength Index near 46, suggesting fading but not yet oversold bearish momentum. A daily close above the 50-day average would be needed to ease the current downside pressure.
For markets, the combination of a constrained UK budget and a cautious Fed keeps pressure on GBP/USD, while easing bond safe-haven demand points to shifting risk appetite that could also influence equity and currency flows tied to the technology sector.
Source: FXStreet