GBP/USD Price Forecast: Softens To Near 1.3200, Staying Bearish Under 100-Day SMA

The GBP/USD pair trades in negative territory around 1.3210 during the early European session on Friday. The British Pound (GBP) weakens against the US Dollar (USD) amid growing domestic fiscal concerns ahead of the upcoming UK budget.

The UK Office for National Statistics showed earlier this week that UK public sector borrowing hit £18.27 billion in August, exceeding the market forecast of £15.35 billion a year prior and £2.04 billion in July. The August reading was higher than expected. The cumulative deficit from April to August reaches £77.3 billion, surpassing the Office for Budget Responsibility's projection by £8.1 billion. 

UK Chancellor John Healey will face pressure to raise taxes or cut spending at next month’s budget, as soaring borrowing costs because of the Iran war and weaker growth have wiped nearly £12 billion off the UK government’s fiscal headroom.

Markets are pricing in a 67% odds of a Bank of England (BoE) rate hike in November, with another increase expected in December, according to LSEG data.

Pound softens as BoE signals greater willingness to tighten on persistent energy pressures

Strategists at Scotiabank note that the Pound is trading weaker, with “the GBP is softer, in line with its core currency peers.” They add that policy messaging from the BoE remains a key driver, highlighting that BoE Deputy Governor Lombardelli “will warn that tighter policy in increasingly likely if energy prices remain high, an advance copy of her comments to be delivered shortly indicate.” This combination of softer GBP price action and firmer BoE rhetoric underscores the market’s sensitivity to the path of energy costs and the central bank’s evolving reaction function.

Technical Analysis: GBP/USD keeps a bearish vibe amid oversold condition

In the daily chart, GBP/USD holds below the 20-day Bollinger middle band and the 100-day simple moving average (SMA), keeping the near-term bias bearish as price remains compressed under a dense cluster of overhead levels. The latest Bollinger lower band sits just above spot, underscoring that the recent slide is pressing against the lower volatility envelope, while the Relative Strength Index (14) around 24 signals oversold conditions that could slow immediate downside, rather than reverse it outright.

On the topside, initial resistance is located at the 20-day Bollinger lower band near 1.3215, a minor pivot just above the current price. Further north, the next hurdle is seen at the July 28 low of 1.3273, en route to the 100-day SMA at 1.3425 and the Bollinger middle band at 1.3438 form a broader cap. The Bollinger upper band at 1.3660 marks a more distant barrier. 

On the other hand, the June 24 low of 1.3140 acts as an initial support level for the major pair. Any follow-though selling below this level could pave the way to the November 21, 2025 low of 1.3038, followed by the November 5, 2025 low of 1.3010.