• The GBP/USD struggles after softer-than-expected inflation data and growing fiscal concerns.
• The US dollar holds firm, maintaining a cautious market sentiment amid the persistent US government shutdown.
• Traders look ahead to comments from FOMC Waller, the API report, and crude oil inventories for further policy and monetary direction. 

The GBP/USD outlook remains pressured, trading below the 1.3350 level, in its fourth consecutive week of losing streak. The British pound weakened amid downbeat UK inflation data and rising fiscal data concerns. 

The latest Office for National Statistics (ONS) figures show the UK CPI held at 3.8% YoY in September, against the expected 4.0% rise. Meanwhile, the core CPI stood at 3.5%, and services inflation was at 4.7%. This suggests the inflation could persist despite signs of easing. 

Additionally, the latest inflation data triggered profit-taking in the pound as fears grew regarding the fragile UK economy. This reduced the probability of a hawkish BoE before the November policy meeting. 

On the other hand, the UK fiscal situation weighs down as the government debt borrowing exceeded expectations by £7.2 billion. This budget deficit has risen to £99.8 billion in the first half of the fiscal year. As there is an increase of more than 66% YoY in debt, the growing interest payments continue to strain the UK’s government finances. 

The dollar stayed steady in the US during the ongoing US government shutdown, now entering its fourth week. Due to the lack of critical key data release, markets see less visibility and tread cautiously. Moreover, a 99% probability of a 25 basis point cut in October limits further uptrend in the US dollar. 
 

GBP/USD Daily Key Events

On Wednesday, traders look forward to the speech by FOMC Waller. Moreover, the traders are eying the delayed US inflation data.
 

GBP/USD Technical Outlook: Bears Pounce 1.3350 Level
 

(Click on image to enlarge)

GBP/USD 4-hour chart
 

The GBP/USD 4-hour chart shows a strong bearish trend, as sellers reclaim control below key moving averages. The price stays below the key 20-, 50-, and 100-MAs, confirming a strong selling interest. 

The RSI is at 30, signaling reduced demand and additional losses as it is still above the oversold region. If the pair continues its downtrend, a drop below the 1.3320 level could trigger further downside towards 1.3280 and 1.3250. On the contrary, a corrective rebound could face resistance around 1.3400 and 1.3460. 
 

Support Levels

• 1.3320 (immediate support)
• 1.3280 (short-term support)
• 1.3250 (key support)
   

Resistance Levels

• 1.3400 (immediate resistance)
• 1.3460 (short-term resistance)
• 1.3500 (psychological resistance)

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