GBP/USD steadies near 1.3139 ahead of UK budget release

The government plans to offset losses by freezing tax thresholds, updating the national insurance framework for the real estate sector, and increasing bank levies. Additional hikes in dividend and capital gains taxes are also being discussed, adding uncertainty and weighing on investor sentiment. Meanwhile, the country’s public debt has reached a record £2.9 trillion — nearly matching its GDP. According to Oxford Economics, the debt level has nearly tripled between 2005 and 2025, raising concerns that high interest rates and weak economic growth could force further tax increases to stabilize finances. In housing data, Nationwide Building Society reported that in October, the UK house price index slowed from 0.5% to 0.3% month-on-month, and from 2.2% to 2.4% year-on-year — offering little support to the pound.

The U.S. dollar index (USDX) stands at 99.5, regaining strength after a temporary easing of U.S.–China trade tensions following the meeting between President Donald Trump and Chinese leader Xi Jinping in South Korea, where the two sides reached a one-year agreement. Traders are now focused on the ongoing U.S. government shutdown — the second longest in history — and the Federal Reserve’s next steps. According to CME FedWatch Tool data, the probability of a 25-basis-point rate cut at the upcoming Fed meeting has dropped to 69.3%, compared with 95.0% a week earlier.

Support and Resistance Levels

On the daily chart, the pair is moving above the lower boundary of a descending channel with dynamic limits between 1.3600 and 1.3050.

Technical indicators remain bearish: the fast EMAs of the Alligator indicator are positioned well below the signal line, while the Awesome Oscillator histogram continues to form corrective bars in the negative zone.

Resistance levels: 1.3200, 1.3430.
Support levels: 1.3050, 1.2830.

GBP/USD Trading Scenarios and Outlook

Short positions may be considered after a decline and consolidation below 1.3050, targeting 1.2830, with a stop-loss at 1.3150. Timeframe: 7 days or longer.

Long positions may be opened after a rise and firm close above 1.3200, targeting 1.3430, with a stop-loss at 1.3100.