• GBP/USD holds steady as ISM Manufacturing contraction reinforces expectations of a December Fed cut.
• FedWatch prices 87% odds of a 25-bps cut despite rising Treasury yields and a flat DXY.
• UK political uncertainty grows after OBR chief resigns, with markets assigning 90% odds of a BoE cut.

GBP/USD holds steady near 1.3200 on Tuesday as the US Dollar (USD) registers minimal gains, despite the US economy continuing to show signs of weakness, which could prompt the Federal Reserve (Fed) to ease policy in the December meeting.

Sterling steady despite soft UK outlook, as rising odds of a December Fed cut dominate market sentiment

On Monday, the Institute for Supply Management (ISM) reported that manufacturing activity shrank for the ninth consecutive month. The ISM Manufacturing PMI in November missed estimates, falling from 48.7 to 48.2, missing forecasts of 48.6. Also, the employment sub-component reaffirmed the low-firing, low-hiring environment, exerting pressure on the Fed to cut rates.

Expectations for a 25-basis-point rate cut by the Fed are 87%, up from 63% a month ago, according to the CME FedWatch Tool.

The US Dollar Index (DXY), which tracks the buck’s performance against a basket of six currencies, is virtually unchanged at 99.43, even as US Treasury yields are rising.

In the UK, the head of the Office for Budget Responsibility (OBR) resigned after the Autumn Budget presented by Chancellor Rachel Reeves was published ahead of the announcement in parliament.

On Tuesday, the Organization for Economic Co-operation and Development (OECD) released its forecasts for the UK economy, which is expected to grow faster than previously expected in 2026. Economic data showed that the UK’s house prices increased faster than expected in November.

Despite this, the Bank of England (BoE) is expected to cut rates at the December meeting, with money markets pricing in a 90% chance, according to LSEG data.

GBP/USD Price Forecast: Technical outlook

GBP/USD remains subdued, capped on the upside by the 50-day SMA at 1.3267. Momentum is also flattish as the Relative Strength Index (RSI) meanders near the 50 neutral line. For a bullish resumption, traders need to clear the 50-day SMA and the 1.3300 figure. If surpassed, they could challenge the 200-day SMA at 1.3315.

On the downside, the first key support is 1.3200. Once surpassed, the next stop is the 20-day SMA at 1.3153, ahead of 1.3100.