GBP/USD rose for the first time in four sessions as the dollar slipped following the Fed’s rate‑hold, while UK budget news had little impact.

The British pound nudged back above the 1.3300 level on Thursday, marking its first gain in four trading sessions. The move was driven mainly by a weaker U.S. dollar after the Federal Reserve left its policy range unchanged at 3.75‑4.00%, rather than by Chancellor Jeremy Healey’s first budget.

Dollar weakness after the Fed’s decision

Fed Chair Jerome Warsh highlighted tighter credit conditions since September and said the policy stance was achieving its intended effect. The Dollar Index fell to its session low while he answered questions, allowing GBP/USD to climb to a session high. The pair’s low stayed just above 1.3250 – the lowest since mid‑October – before the budget speech began, and it barely moved during the speech itself.

UK budget and fiscal headroom

The Office for Budget Responsibility (OBR) now estimates the government’s fiscal headroom at £15 billion for 2029‑30, down from £24 billion in March, even after new taxes on banks and gambling. The 10‑year gilt yield eased despite the OBR’s forecast of roughly £14 billion of extra debt interest this year, almost matching the remaining headroom. The pound’s rise is therefore a relative gain against the dollar, not the euro, which stayed weaker.

What traders are watching next

• Core PCE price index (Sept) at 12:30 GMT Thursday – forecast 3.1% YoY
• Headline PCE at 3.6% forecast, up from 3.4%
• Q3 Employment Cost Index Friday 12:30 GMT – forecast 0.8%
• Bank of England rate decision on 5 Nov – most forecasts 4.00%

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This article is compiled from international market news for information only. It is not investment advice.