GBP/USD struggles at 1.3200 after retreating from five-week peak in early European trading

    by VT Markets
    /
    Dec 2, 2025
    The GBP/USD pair is holding steady around 1.3200 after dropping from its recent high of 1.3276. The British Pound is under pressure due to expectations that the Bank of England may cut interest rates, combined with a stronger US Dollar.

    Technical Indicators Overview

    The recent UK Autumn Budget provided only a brief lift, as market focus remains on central bank expectations. Technical indicators show a slight increase in the 21-day Simple Moving Average (SMA), while the 50-day SMA is still acting as a resistance level. The Relative Strength Index (RSI) sits at a neutral 51.47, suggesting that momentum is stabilizing. If the price closes above the 50-day SMA at 1.3270, it could lessen downward pressure. However, failing to break this level keeps sellers in charge. In daily trading, the British Pound rose by 0.16% against the Japanese Yen, making it the top performer among major currencies. Overall market conditions continue to be influenced by wider economic trends, affecting the GBP/USD outlook. Traders should keep an eye on any changes in SMAs and RSI levels for hints at potential price shifts. The interaction between technical indicators and economic expectations points to cautious trading behavior.

    Market Sentiment and Economic Indicators

    With the GBP/USD pair struggling to hold above 1.3200, the main catalyst appears to be the increasing expectation of a Bank of England rate cut scheduled for December 18. This sentiment is overshadowing any positive local news, such as the recent UK Autumn Budget, suggesting a downward trend is likely as long as these views persist. Recent economic data supports this bearish outlook. The latest figures from the Office for National Statistics (ONS) revealed that UK inflation fell to 2.1% in October, moving closer to the Bank of England’s target and allowing for easier policy adjustments. Additionally, GDP growth for the third quarter of 2023 was revised down to just 0.1%, strengthening the case for a proactive rate cut to stimulate the economy. Create your live VT Markets account and start trading now.

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