Pound to Dollar Price Forecast: GBP/USD Deeply in "Oversold Territory"

Modified: Wednesday, 5 November 2025 09:30 BST - Written by Frank Davies

STORY LINK Pound to Dollar Price Forecast: GBP/USD Deeply in "Oversold Territory"

The Pound-to-Dollar exchange rate (GBP/USD) extended its slide on Tuesday, hitting a six-month low as UK Chancellor Rachel Reeves warned that “difficult fiscal choices” lie ahead in her upcoming budget.

At the time of writing, GBP/USD was trading around $1.3065, down roughly 0.6% on the day.

Sterling came under renewed pressure after Reeves signalled that the government may need to raise taxes to stabilise the public finances, fuelling investor concerns over growth.
She noted that the economic outlook had deteriorated since the last budget, while stopping short of ruling out income tax hikes — a move that unsettled markets and weighed heavily on sentiment toward the Pound.

Despite the rhetoric, gilt yields slipped as investors drew some reassurance from Reeves’s commitment to maintain the government’s fiscal rules, tempering fears of runaway borrowing.

Meanwhile, the US Dollar (USD) found support from safe-haven flows as risk appetite deteriorated.
A deepening US government shutdown — now one of the longest in history — and a lack of fresh economic data bolstered demand for the Greenback.
Markets were also still digesting last week’s hawkish 25bp rate cut from the Federal Reserve, with Chair Jerome Powell’s cautious tone helping to reinforce USD’s firm footing.

GBP/USD Forecast: US Jobs Data in Focus

Looking ahead, the Pound to Dollar exchange rate may stabilise midweek if the latest ADP employment report signals further weakness in the US labour market.
With the non-farm payrolls report delayed by the shutdown, the data could attract greater scrutiny than usual.

A soft reading may fuel expectations for more aggressive Fed easing later this year, potentially dragging the Dollar lower.
Conversely, any upside surprise — or a rebound in the ISM services PMI — could keep USD supported.

For the Pound, traders remain cautious ahead of Thursday’s Bank of England meeting, with mounting rate-cut speculation likely to cap any meaningful recovery in GBP/USD near-term.

GBP/USD TECHNICALS:

Scotiabank’s latest technical outlook adds to the cautious tone, describing GBP/USD as firmly bearish in the short term.

The bank notes that the RSI has fallen below 30, placing the pair in deeply oversold territory around the mid-25s — levels that “rarely hold” for long.

However, analysts caution that there are no significant support levels before the psychologically important 1.30 handle, suggesting downside risks remain.

Scotiabank sees the pair consolidating within a near-term range of 1.3020 to 1.3120, with sentiment still skewed towards further weakness.

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TAGS: Pound Dollar Forecasts