The GBP/USD is currently trading just above 1.30 and has shown some support after the final services and composite PMIs came in slightly better than expected, printing in the low 50s. Attention is focused on the UK’s financial outlook ahead of the budget on November 26. There are worries about the OBR’s productivity estimates and possible fiscal deficits. The RSI is notably oversold, sitting in the mid/low 20s as the Pound approaches the 1.30 level.

Support Near 1.30 Level

Support may hold around this mark due to previous congestion in the mid-1.28/1.30 range from March and April. The expected near-term trading range is between 1.30 and 1.31. The FXStreet Insights Team gathers key observations from market experts, sharing insights from both internal and external analysts. GBP/USD is currently consolidating just above the 1.30 level. Recent UK economic data, such as the October composite PMI at 51.5, offers some modest support for the Pound. This indicates slight growth in the private sector, helping to prevent a further decline for now.

Market Focus on UK Budget

The key focus for the market is the upcoming UK budget announcement on November 26. There’s considerable risk related to the Office for Budget Responsibility’s (OBR) productivity estimates. A downward revision seems likely, which could indicate a larger fiscal deficit than expected. From a technical standpoint, the 14-day Relative Strength Index (RSI) is around 28, a deeply oversold level. This suggests that the recent selling may be excessive, possibly limiting further declines in the short term. This often leads to a stabilization period or a brief bounce. Historically, there is strong support just below the current level. The congestion in the mid-1.28s to 1.30 range back in March and April suggests that this area will be tough to break. Traders should monitor this zone closely as it may act as a floor for the currency pair. Given this situation, we predict a range-bound market between 1.30 and 1.31 leading up to the fiscal event. Selling short-dated options strangles with strikes outside this range could be an effective strategy to take advantage of low volatility and time decay. This method benefits from the market’s anticipation of its next major catalyst. As we approach November 26, implied volatility is likely to rise sharply due to the uncertainty surrounding the budget announcement. Traders may want to consider adjusting their strategies to buy volatility through instruments like straddles. This positions them to profit from significant price moves in either direction, regardless of whether the fiscal news is good or bad. Create your live VT Markets account and start trading now.

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