Published: 20 November 2025,06:26
Daily Market Analysis New
Key Takeaways:
*Sterling weakens sharply, with GBP/USD sliding 0.5% as softer CPI data (3.6%) boosts expectations for earlier BoE rate cuts.
*Fiscal uncertainty intensifies, with investors increasingly cautious ahead of the Nov. 26 Autumn Budget amid concerns over potential tax hikes.
*Stagflation fears deepen, as inflation remains elevated relative to the Eurozone while growth slows—leaving the Pound vulnerable to further downside in the near term.
Market Summary:
The Pound Sterling faced broad-based selling pressure in the recent session, with GBP/USD declining approximately 0.5% to touch its lowest level in a week. The currency’s weakness stems from a confluence of domestic factors, including a softer-than-expected inflation print and mounting apprehensions surrounding the upcoming Autumn Budget.
Yesterday’s CPI reading of 3.6% (down from 3.8%) has prompted markets to price in a higher probability of earlier BoE rate cuts, removing a key pillar of support for the currency. The primary headwind, however, remains the significant fiscal uncertainty. Investors are growing increasingly nervous about Chancellor Rachel Reeves’s forthcoming budget plans, with expectations of potential tax hikes raising concerns about the UK’s fiscal credibility and longer-term economic vitality.
The November 26th budget announcement represents a critical event risk, likely to maintain downward pressure on Sterling in the immediate term.
Compounding these challenges, the BoE continues to grapple with persistent inflation that remains notably higher than the Eurozone’s near-2% rate. This combination of elevated price pressures and slowing economic growth has heightened market anxieties about a potential stagflation scenario—a development that would fundamentally undermine the Pound’s structural support. The currency remains vulnerable to further depreciation as these intertwined monetary and fiscal concerns continue to unfold.
Technical Analysis
The GBPUSD pair has confirmed a significant deterioration in its technical structure, declining approximately 5% from its September peak of 1.3725. The breakdown follows a period of consolidation that culminated in a false breakout pattern—a classic bearish continuation signal—before the pair decisively broke below its established range support.
This price action suggests the resumption of the primary downtrend, with the false breakout likely trapping bullish positions and accelerating the subsequent decline. The breakdown below the consolidation range establishes a new, lower trading band and indicates strengthening selling pressure.
Momentum indicators substantiate the bearish outlook. The Relative Strength Index (RSI) has entered oversold territory, reflecting intense selling momentum, while the Moving Average Convergence Divergence (MACD) has crossed below its zero line. This configuration suggests fresh bearish momentum is accelerating. The pair now faces initial resistance at the former range support near 1.3400, with any technical rebounds likely to encounter selling pressure at this level. The next significant support zone appears near the 1.3150 area, with a break below potentially opening the path toward the 1.3000 psychological handle.
Resistance Levels: 1.3162, 1.3290
Support Levels: 1.3000, 1.2867
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