GBP/USD, Oil Forecast: Two Trades to Watch

GBP/USD Rises Ahead of UK Budget

GBP/USD has increased for the fifth consecutive session, driven by weakness in the US dollar and anticipation of the upcoming UK autumn budget by Chancellor Rachel Reeves. She is expected to announce various tax hikes aimed at closing a £30 billion funding gap, following a reversal on previously planned income tax rises. The Office for Budget Responsibility’s economic forecasts will also be closely examined, as a weak outlook could trigger a sharp decline in the pound.

Oil Falls to a Five-Week Low

Oil prices have dropped to around $58 per barrel, hitting a five-week low due to progress in peace negotiations between Ukraine and Russia. President Trump stated that the peace talks are nearly finalized, with only a few issues remaining unresolved. If a peace agreement is reached, sanctions on Russia—one of the major oil suppliers—may be lifted, which would likely increase supply and fuel concerns over oversupply in the market next year.

Impact on Markets

The potential lifting of sanctions on Russia could lead to an intensified oil supply glut, as production may continue to outpace consumption. Meanwhile, US crude inventories have recently fallen by 1.9 million barrels, marking the first decrease after three successive weekly increases. The UK government borrowing figures released recently indicated a higher-than-expected deficit, maintaining economic uncertainty ahead of the budget announcement.

“If the outlook is weak, the pound could fall sharply.”
“Should Russia and Ukraine reach a peace agreement, sanctions on Russia could be lifted, potentially boosting supply and intensifying concerns over a supply glut next year.”
— Market analysis sources

The combination of these financial and geopolitical factors creates important trade opportunities for investors watching GBP/USD and oil markets.

The market is reacting to both UK fiscal policy uncertainty and geopolitical progress in the Russia-Ukraine conflict, offering key trading insights in GBP/USD and oil pricing dynamics.

more

FOREX.com FOREX.com — 2025-11-26

More News