How is GBP/USD performing?

Over the past month, the GBP/USD exchange rate has faced significant fluctuations amid economic developments in both the UK and the US. Starting October near 1.33, the pair has seen bearish pressure, closing the month around 1.30. Key events impacting this performance included the UK's new budget announcement and the market's response to expectations of a potential interest rate cut by the Bank of England.

The UK's first budget in 14 years, presented by Chancellor Rachel Reeves, introduced tax hikes and spending increases aimed at addressing a £40 billion deficit. Despite the efforts to stabilize public finances, market sentiment became cautious, with concerns that higher taxes might slow economic growth. The GBP/USD pair dropped to 1.2936 shortly after the budget announcement as the market anticipated a more dovish approach from the Bank of England in response to economic pressures and high unemployment

On the other hand, strong US retail sales and resilient economic data boosted the dollar, adding downward pressure on GBP/USD. This trend also reflected seasonal dollar strength, as investors gravitated toward the greenback amid anticipation of the US Federal Reserve’s monetary policy decisions​

Looking ahead, traders are closely watching the Bank of England’s upcoming decisions, as further rate cuts could lead to more GBP/USD volatility in the months ahead.