The British pound slipped slightly below the $1.35 handle on Monday, with momentum subdued as traders digest the broader implications of the disappointing September PMI release and a worrying surge in public borrowing.

The latest S&P Global PMI showed a sharp slowdown in private-sector activity, with the services sector expanding at a slower pace and manufacturing continuing its contraction. The miss against market expectations rekindled concerns that the economic recovery in the UK is losing traction heading into Q4.

With the Autumn Budget looming in November, the figures raise alarm over the government’s limited fiscal headroom, especially as 30-year gilt yields hit record highs, tightening financial conditions and increasing the cost of servicing debt. The Bank of England opted to leave interest rates unchanged in its latest meeting, maintaining a cautious tone.

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Traders are now pushing back their expectations for the next rate cut into 2026, a stark contrast to the US and Eurozone, where central banks have begun shifting toward easing.

Technical Analysis – GBPUSD

GBPUSD is currently trading at 1.3505, down a modest 0.07% on the day, showing hesitation after recent gains. The pair has been consolidating in a range after peaking at 1.3789 in July, with price action now hovering near the mid-point of that broader structure.

The moving averages (5, 10, 30) remain relatively flat, reflecting sideways momentum, while the MACD histogram shows weakening bullish momentum as the signal lines converge near the zero level. This suggests that the pair may be entering a period of consolidation unless a decisive breakout occurs.

Key support is seen at 1.3400, followed by stronger demand around 1.3200, which has acted as a floor during past corrections. On the upside, resistance stands near 1.3650, with a decisive push above 1.3789 required to resume the longer-term bullish trajectory.

Overall, GBPUSD is in a neutral-to-bullish stance. Holding above 1.3400 keeps the broader uptrend intact, but a lack of momentum may see the pair trapped in range-bound trading in the near term.

Cautious Forecast for the Pound Sterling

With weak PMI prints and a troubling fiscal outlook, GBP/USD may face renewed downside risk, especially if upcoming data confirms a broader economic slowdown.

However, the BoE’s decision to hold rates steady and delay cuts into 2026 continues to provide underlying support, keeping the pound more stable than expected.

In the short term, the pair may range between 1.3460 and 1.3600, depending on macroeconomic releases and shifts in sentiment. A break below 1.346 could expose 1.3300, while a rebound above 1.3600 would require stronger-than-expected growth or inflation figures to reassert bullish control.

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