GBP/USD weakens below 1.3000 as traders brace for US PCE data

• GBP/USD softens to near 1.2955 in Thursday's early Asian session. 
• The UK's Labour government raised taxes by £40 billion in the new budget plan. 
• Flash US GDP expanded at an annualised rate of 2.8% in Q3. 

The GBP/USD pair extends the decline to around 1.2955 during the early Asian session on Thursday. The Pound Sterling (GBP) edges lower after the UK budget announcement. The attention will shift to the US Personal Consumption Expenditures (PCE) - Price Index data later on Thursday.

The UK's new Labour government released its first budget on Wednesday, which includes £40 billion in tax rises to plug a hole in the public finances and allow for investment in public services, per CNBC. One of the measures that is projected to be one of the most revenue-generating for the UK Treasury is a hike in the amount employers pay out in National Insurance (NI), a tax on earnings. 

The US Gross Domestic Product (GDP) for the third quarter fell below expectations. The ADP Employment Change report for October revealed that private companies hired more people than expected. According to the CME FedWatch tool, traders have priced in a nearly 95.2% chance of a 25 bps rate cut by the Fed in the November meeting. 

The release of the US PCE inflation data on Thursday could offer some hints about the size and pace of the US Federal Reserve's (Fed) rate reduction path. The headline PCE is expected to see an increase of 0.2% MoM in September, while the core PCE is estimated to see a rise of 0.3% MoM in the same reported period. The softer-than-expected outcome could trigger the hope of deeper rate cuts and might exert some selling pressure on the USD.