GBPUSD falls as bullish pressure fades and budget risks loom

The GBPUSD's recent rebound is running out of steam. The pair formed a red candle during Friday's morning session, pulling back from its intraday highs to hover around 1.31188. With the UK budget looming, market uncertainty takes hold, setting the stage for a flat to come into play.

Technical indicators show that bulls are losing their grip. The Stochastic Oscillator (with %K=60 and %D=67) is turning down and flashing a sell signal, suggesting the upward movement has run its course. Meanwhile, the Chaikin Oscillator has also peaked and is now falling, meaning less new money is coming in to support prices. Even the Bollinger Bands are squeezing together, thus saying volatility is drying up and the market is stuck in a stalemate—though with quotes sitting below the midline, sellers have a slight edge.

From a fundamental standpoint, the pound is facing headwinds from the upcoming budget. The new government's planned tax hikes (with UK Chancellor of the Exchequer Rachel Reeves at the helm) threaten to slow the economy down, which has already been shaken by weak GDP numbers in the third quarter (Q3) and a cooling housing market. Throwing fuel on the fire, political instability within the ruling party and the Prime Minister's rock-bottom popularity are heightening uncertainty. This messy backdrop leads investors to believe that the Bank of England (BoE) is likely to cut interest rates sooner than later, especially with unemployment ticking up. 

Across the pond, the US dollar is also set to be a source of volatility. The American government is back open, and a huge backlog of economic data is about to be released. This will force traders to reconsider what the Federal Reserve (Fed) will do next. If this data dump shows US GDP and inflation are still resilient, the resulting market swings could easily give the greenback a boost.

Take into account the trading plan outlined below:

Sell GBPUSD. Take profit: 1.30110. Stop loss: 1.32315.

This forecast is valid from November 14 till November 21, 2025.