GBP/USD under pressure after UK budget plan — key levels in focus

All personal income tax thresholds will be frozen until the 2030–2031 fiscal year, which could generate up to £8.3 billion annually. Analysts estimate that, taking all measures into account, up to £22.0 billion in fiscal reserves could be secured, compared to £10.0 billion in March. According to the Chancellor, duties on electric vehicles will reach up to £1.4 billion, gambling taxes — £1.1 billion, and the additional surcharge on council tax for housing — more than £2.0 billion. Base dividend tax rates from April 2026 will increase by 2.0 percentage points to 10.75% and 35.75%, depending on the size of capital, generating up to £1.2 billion. Experts at Deutsche Bank AG note that, despite productivity declines, the government has more room to respond to risks than previously expected due to higher revenues and rising equity markets. However, the timing of fiscal consolidation is heavily back-loaded, with many of the announced changes scheduled for the second half of the UK Office for Budget Responsibility (OBR) forecast horizon. Borrowing is likely to remain on a downward trajectory, while the budget deficit is expected to ease from 4.5% of GDP to 3.5% in the next fiscal year and to just under 2.0% of GDP by the end of the decade. Overall, the reforms were received positively, providing support to the pound.

The US dollar is trading at 99.40 on the USDX. Today and tomorrow, US markets are closed for the Thanksgiving holiday. Investors are assessing data on initial jobless claims for the October weeks that were missed due to the government shutdown, which showed a decline from 222,000 to 219,000, while continuing claims increased from 1.953 million to 1.960 million. This further confirms the probability of a Fed rate cut at the December meeting: according to the CME Group FedWatch Tool, the probability now stands at 84.9%.

Support and resistance levels

On the daily chart, the instrument is correcting slightly above the support line of a descending channel with dynamic boundaries of 1.3540–1.3000.

Technical indicators continue to give a sell signal: the fast EMAs of the Alligator indicator are approaching the signal line from below, while the AO histogram is forming rising bars in negative territory.

Resistance levels: 1.3340, 1.3540.

Support levels: 1.3160, 1.2950.

Trading scenarios and GBP/USD outlook

Long positions can be considered after a rise and consolidation above the 1.3340 level, with a target at 1.3540. Stop-loss — 1.3250. Time horizon: 7 days or longer.

Short positions can be considered after a decline and consolidation below the 1.3160 level, with a target at 1.2950. Stop-loss — 1.3230.