On October 29th, forex analyst Gary Howes stated that GBP/USD may still face pressure in the coming days, and the previous rounds of strength may be short-lived.

He previously stated that the pound against the US dollar is facing pressure from the 9-day moving average, so it is inclined to decline this week, with a downward target level of 1.2909.

It can be confirmed that the momentum of the US dollar stalled in the latter half of last week, leading some to believe that the downward trend began to weaken. However, the failure of the GBP/USD to break through the 9-day moving average indicates a clear lack of interest in shorting the USD in the market.

The fundamentals of risk management indicate that it is unwise to prevent the pound from weakening against the dollar at present, and those who wish to purchase the dollar should clear some of their exposure before the US vote next Tuesday.

Before the results of the November 5th US election are announced, the market needs to pay attention to the October non farm payroll data released on Friday. Strong data may boost US bond yields and the US dollar, and depress sterling against the US dollar.

In addition, some forecasts suggest that the UK's economic growth rate may reach 0.50%, which will require the Bank of England to be more cautious when cutting interest rates, thereby benefiting the pound.

The risk faced by sterling is that the market is unfriendly to the expected increase in borrowing, similar to the reaction of the mini budget in 2022 aborted by Trass, which led to the collapse of sterling.

However, all analysts surveyed stated that what they saw and heard was enough to believe that this situation was unlikely to happen. Therefore, Howes believes that the UK budget will not pose significant downside risks to the pound.

Daily chart of GBP/USD