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24 October 2025,03:45
Daily Market Analysis New
24 October 2025, 03:45
Key Takeaways:
*Softer inflation data (headline CPI at 3.8%, core 3.5%) triggered aggressive market bets on BoE rate cuts by year-end, eroding Sterling’s yield advantage.
*Chancellor Reeves faces a £25B budget shortfall ahead of the Autumn Budget, raising fears of fiscal slippage and renewed credibility concerns.
*Business and consumer data point to stagnating demand, with manufacturing and retail indicators signaling economic softness.
Market Summary:
The British Pound remains under sustained pressure as dovish repricing in Bank of England (BoE) rate expectations and rising fiscal anxieties weigh on sentiment. The recent downside acceleration in Sterling followed softer-than-expected inflation data, with headline CPI holding at 3.8% and the core measure easing to 3.5%. This moderation reinforced market conviction that price pressures have peaked, prompting traders to ramp up bets on near-term policy easing — with futures now pricing a roughly 75–80% chance of a BoE rate cut by December. The shift has pushed short-term gilt yields to multi-month lows, eroding the currency’s rate differential advantage.
Adding to the bearish tone are renewed fiscal concerns ahead of the Autumn Budget. Chancellor Rachel Reeves faces a £25 billion shortfall driven by weaker growth and rising debt service costs, reviving market unease reminiscent of the 2022 mini-budget turmoil. Investor focus has turned sharply toward whether fiscal policy can remain credible amid calls for stimulus. Any sign of fiscal slippage or political interference with BoE independence would further undermine Sterling sentiment.
While global risk appetite has improved modestly amid easing geopolitical tensions, domestic headwinds continue to dominate the narrative. Business surveys point to stagnating demand and waning investment confidence, while retail sales and manufacturing indicators highlight an economy flirting with stagnation. In this context, Sterling’s rebounds are likely to be shallow and short-lived, with traders preferring to sell into strength ahead of key fiscal announcements and BoE communication. The near-term trajectory remains tilted lower unless fiscal clarity or a hawkish policy surprise shifts sentiment.
Technical Analysis
GBP/USD remains under sustained downward pressure on the chart, extending its retreat below the 1.3480 handle as sellers retain control. The pair continues to trade beneath both the 20- and 50-period moving averages, which are trending lower and reinforcing a bearish short-term bias. Immediate support lies near 1.3265 which is a level that has been tested multiple times over recent sessions. A decisive break beneath this area could expose the next downside targets at 1.3200, marking a potential continuation of the broader bearish leg that started in late September.
Momentum indicators reflect the weakness in the pair. The RSI currently hovers near 39, suggesting a lack of buying interest and positioning the pair close to oversold territory. Meanwhile, the MACD remains below the zero line with widening negative histogram bars, indicating that bearish momentum is regaining traction after a brief consolidation phase.
Overall, the technical outlook favors sellers while GBP/USD remains capped below 1.3480. A recovery above this zone particularly if accompanied by a break above 1.3480 would be required to shift near-term sentiment toward neutral. Failing that, continued weakness toward 1.3260 and 1.3200 remains the more probable scenario amid persistent downside momentum.
Resistance Levels: 1.3350, 1.3480
Support Levels: 1.3265, 1.3200
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