The British Pound (GBP) rebounded from its lowest level since July 30, trading around the 1.3375-1.3370 region earlier in the day, and managed to break a three-day losing streak against the US Dollar (USD) as of Thursday. Spot prices moved above the 1.3400 mark, though traders remained cautious ahead of the Bank of England's (BoE) upcoming policy decision later today [1]. The BoE is widely expected to keep interest rates steady, with market attention focused on the Monetary Policy Committee (MPC) vote distribution and forward guidance. Market participants are currently pricing in at least one 25-basis-point rate hike by the BoE in 2026, driven by inflation risks linked to higher energy prices [1].
A modest pullback in US Treasury yields led to some profit-taking in the USD, which supported the GBP/USD pair ahead of the BoE announcement. However, the US Federal Reserve's recent hawkish stance and ongoing geopolitical tensions in the Middle East, particularly between the Houthi group and Saudi Arabia, have continued to support the safe-haven USD, limiting the upside for GBP/USD. The Fed raised rates for the first time since 2023 at its September meeting, and the dot plot indicated that officials expect one more rate hike this year due to oil-driven inflation concerns [1].
Technical analysis shows that GBP/USD maintains a bearish near-term outlook, trading below the 100-day Exponential Moving Average (EMA) at 1.3461 and just under the 50.0% retracement at 1.3409. Support is identified at the 61.8% retracement at 1.3346, with further support at the 78.6% Fibonacci level at 1.3256 if the decline continues [1].
The BoE's interest rate decision, scheduled for later today, is a key event for the market. If the BoE adopts a hawkish stance or raises rates, it is typically bullish for GBP; conversely, a dovish outlook or unchanged rates is seen as bearish for the currency [1].
CONCLUSION
The British Pound has shown a modest recovery ahead of the Bank of England's policy decision, but upside remains limited due to a strong US Dollar and global uncertainties. Market participants are closely watching the BoE's guidance and vote distribution for clues on future rate moves. The outcome of the central bank meeting will likely set the near-term direction for GBP/USD.