GBP/USD held steady around 1.3245 during Monday’s Asian session, with traders assessing the impact of the UK’s Autumn Budget while rising expectations of a Federal Reserve (Fed) rate cut help limit downside pressure on the pair.
Attention now turns to the US ISM Manufacturing PMI for November, due later today, for fresh trading cues.
UK Chancellor Rachel Reeves unveiled the Autumn Budget last week, outlining tax increases along with adjustments to business rates, benefits, and pensions. Following the announcement, the Office for Budget Responsibility (OBR) upgraded its 2025 growth forecast from 1.0% to 1.5%.
However, growth projections were trimmed to 1.4% for 2026 and held at 1.5% for the subsequent four years. The measures may provide modest near-term support for the Pound Sterling (GBP) against the US Dollar (USD), as markets position for potential fiscal-driven stability.
Market drivers
On the US side, expectations for a December rate cut have strengthened amid uncertainty and dovish signals from Fed policymakers. Fed funds futures now price an 87% chance of a 25 bps cut next week, up from 71% a week earlier, according to the CME FedWatch tool.
Fed Governor Christopher Waller noted that labor market data supports the case for another quarter-point cut, while San Francisco Fed President Mary Daly said she backs lowering rates due to a sharp deterioration in employment indicators – arguing that such risks outweigh concerns of a renewed inflation surge.
These dovish remarks have pressured the Greenback and kept GBP/USD supported, though momentum is likely to remain subdued until fresh US data provides additional clarity on the Fed’s policy path.
