British Pound loses its footing as BoE holds meet Fed tightening

• BoE holds at 3.75% as three policymakers back another hike.
• Fed’s first hike in three years strengthens Dollar policy advantage.
• UK Retail Sales take center stage after central-bank doubleheader.

The Pound Sterling extended its losses on Thursday, following the Bank of England's decision to hold rates unchanged in a 6-3 vote, while leaving the door open for a potential hike. This and Wednesday’s Fed decision capped the GBP/USD advance, with the pair trading at 1.3381, down over 0.23%.

Sterling weakens as BoE holds while Fed signals more tightening

As expected, the BoE maintained the Bank Rate unchanged at 3.75%, with the three dissenters opting for a 25-basis-point rate hike, as seen at the previous meeting. BoE’s Greene, Mann and the Chief Economist Pill. In the same meeting, the BoE also decided to reduce UK bond (Gilt) purchases and to plan annual Gilt sales of up to £20 billion.

In the statement, the BoE said it is ready to act to ensure inflation reaches its target, that inflation risks are tilted to the upside, and that the required monetary policy will depend on the duration of the energy shock.

Following the BoE’s decision, money markets had priced in a 64% chance for a rate hike in the November 5 meeting. Now eyes turn to UK August Retail Sales on Friday, foreseen to improve following a -0.5% MoM contraction in July.

On Wednesday, the Federal Reserve raised rates for the first time in three years, to 3.75%-4% and recognised that the US economy remains solid and the labour market strong. As of writing, money markets had priced in a 53% chance of another rate hike at the October meeting.

According to the Fed’s Summary of Economic Projections (SEP) dot-plot, policymakers see another rate hike by the end of the year, meaning that the Fed funds rate is poised to end above the 4% threshold.

Officials expected the PCE to stay at 3.7% this year and to converge toward the Fed’s goal of 2% until 2028.

Data-wise, the US economic docket revealed that jobless claims for the week ending September 12 dipped sharply from 206K to 196K, well below the 206K forecast.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3343, maintaining a bearish near-term bias as spot holds below the triple simple moving average (SMA) cluster now around 1.3482 and beneath multiple broken trend-line supports that have turned into resistance. The Relative Strength Index (RSI) at 30 suggests downside momentum is flirting with oversold territory, yet price location under the key moving averages and the descending resistance lines still hints that rallies are likely to be capped rather than sustained.

On the topside, immediate resistance emerges at the former downtrend barrier around the break of the longer resistance line near 1.3347, followed by the more established descending trend-line from 1.3653, whose break level sits around 1.3457. Above there, the triple SMA cluster near 1.3482 aligns with the broken rising trend-line off 1.3140 at 1.3484, reinforcing a dense supply zone before the higher former support trend-line break around 1.3697. With no clear structural support levels defined below the market in this dataset, the pair appears vulnerable to further slippage until new demand emerges on fresh price action.

(The technical analysis of this story was written with the help of an AI tool. Know more.)