Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
More View More
British Pound Outlook: GBP/USD Soars as Truss Hastens Efforts to Regain Credibility

British Pound Outlook: GBP/USD Soars as Truss Hastens Efforts to Regain Credibility

Diego Colman, Strategist


  • The British pound surges, rising more than 2% against the U.S. dollar after the UK government reverses nearly all tax cut plans announced a few weeks ago
  • GBP/USD has recovered most of the losses suffered since the mini-budget was released, suggesting that upside may be limited going forward
  • From a fundamental standpoint, sterling maintains a challenging outlook over the medium term

Trade Smarter - Sign up for the DailyFX Newsletter

Receive timely and compelling market commentary from the DailyFX team

Subscribe to Newsletter

Most read: S&P 500, Nasdaq 100 and Dow Jones Price Action Setups

The British pound soared on Monday, rallying more than 2% against the U.S. dollar, bolstered by risk-on mood and news that the UK government will abandon most of the economic plans put forward a few weeks ago that sent markets into turmoil and prompted the central bank to undertake emergency quantitative easing.

Jeremy Hunt, who was appointed as the new Chancellor of the Exchequer last Friday, announced today that he would reverse virtually all of the tax cuts included in the “mini-budget” rolled out by his predecessor Kwasi Kwarteng as he tries to salvage fiscal credibility and straighten out public finances.

The reversal suggests Prime Minister Liz Truss may be trying to make amends to convince investors that the country will be on a fiscally sustainable path, avoiding borrowing excessively to fund expansionary policies at time of high inflation and a sizeable current account deficit.

A more prudent fiscal policy should be supportive of the GBP/USD, but the pair has already recouped most of the losses incurred since the unveiling of the mini budget that sparked a major gilts selloff, so its upside potential may be limited going forward.

Over the medium term, sterling is likely to continue to struggle due to external imbalances and weak domestic fundamentals. Focusing on the economy, the country is likely to enter severe downturn in 2023, which coupled with persistent price pressures, should act to undermine UK assets, increasing capital outflows from domestic markets.

The divergence in monetary policy between the Bank of England and the Fed should also be a headwind for cable. While the BoE has been steadily raising rates, it has not been as aggressive as the FOMC, with the institution lifting borrowing costs less than expected at six of its last eight meetings, a sign that policymakers are not comfortable with an overly hawkish stance amid mounting recession risks.

GBP Forecast
GBP Forecast
Recommended by Diego Colman
Get Your Free GBP Forecast
Get My Guide


GBP/USD reclaimed the 1.1400 handle at the start of the week, rising to its best level since October 5th on strong bullish momentum. If buyers retain control of the market, the next resistance to consider appears at 1.1460/1.1500. On further strength, the focus shifts to 1.1600, followed by 1.1740. On the flip side, if Monday’s rally starts to fade, initial support is located at 1.1380/1.1355. If this floor is breached, we could see a move towards 1.1240 and then 1.1150.


Chart, histogram  Description automatically generated

GBP/USD Chart Prepared Using TradingView

GBP/USD Bullish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 0% 1% 0%
Weekly -7% -2% -5%
What does it mean for price action?
Get My Guide


  • Are you just getting started? Download the beginners’ guide for FX traders
  • Would you like to know more about your trading personality? Take the DailyFX quiz and find out
  • IG's client positioning data provides valuable information on market sentiment. Get your free guide on how to use this powerful trading indicator here.

---Written by Diego Colman, Market Strategist for DailyFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.