British Pound rebounds from July 30 lows vs retreating USD as traders await BoE decision

• GBP/USD gains some positive traction as retreating US bond yields prompt USD profit-taking.
• The Fed’s hawkish outlook and geopolitical tensions limit deeper USD losses, capping the pair.
• Traders now await the BoE policy update for future rate path and some meaningful impetus.

The GBP/USD pair stages a modest recovery from its lowest level since July 30, around the 1.3375-1.3370 region touched earlier this Thursday, and, for now, seems to have snapped a three-day losing streak. Spot prices, however, capitalize on the momentum beyond the 1.3400 mark as traders seem hesitant ahead of the Bank of England (BoE) policy update.

The UK central bank will announce its decision later today and is widely expected to keep interest rates steady, suggesting that the focus will be on the MPC vote distribution and forward guidance. Market players are currently pricing in at least one 25-basis-points (bps) rate hike by the BoE in 2026 amid inflation risks stemming from higher energy prices. Hence, the outlook will play a key role in influencing the British Pound (GBP) and provide a fresh impetus to the GBP/USD pair.

Meanwhile, a modest pullback in US Treasury bond yields triggers some US Dollar (USD) profit-taking, which, in turn, is seen supporting the currency pair heading into the key central bank event. However, the US Federal Reserve's (Fed) hawkish tilt and escalating Middle East tensions continue to act as a tailwind for the safe-haven USD, capping the GBP/USD pair. In fact, the US central bank raised rates for the first time since 2023 at the conclusion of the September meeting on Wednesday.

Moreover, the so-called dot plot revealed that Fed officials expect one more interest rate hike this year amid oil-driven inflation fears. Adding to this, intensifying fighting between the Houthi group and Saudi Arabia keeps the geopolitical risk premium in play, which underpins the Greenback and keeps a lid on any meaningful upside for the GBP/USD pair. Hence, it will be prudent to wait for strong follow-through buying before confirming that spot prices have bottomed out in the near term.

GBP/USD daily chart

Technical Analysis

The GBP/USD pair keeps a bearish near-term tone beneath the 100-day Exponential Moving Average (EMA) at 1.3461. Spot prices also trade just under the 50.0% retracement at 1.3409, suggesting that recent rebounds remain capped by layered resistance overhead.

On the downside, support is seen at the 61.8% retracement at 1.3346, ahead of the deeper 78.6% Fibo. level at 1.3256, where buyers would be expected to show more interest if the decline extends.

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