GBP/USD consolidates above mid-1.3300s as traders await BoE and US CPI report

• GBP/USD lacks any firm intraday direction as traders opt to wait for the BoE policy decision.
• A soft UK CPI print and a rise in the Unemployment Rate back the case for a rate cut.
• Dovish Fed expectations keep a lid on the attempted USD recovery, supporting spot prices.

The GBP/USD pair struggles to capitalize on the overnight bounce from the 1.3310 area, or a one-week low, and oscillates in a narrow band during the Asian session on Thursday. Spot prices currently trade around the 1.3370 region, down less than 0.10% for the day, as traders opt to wait on the sidelines ahead of the key central bank event risk and US consumer inflation data.

The Bank of England (BoE) is scheduled to announce its policy decision later today and is widely expected to lower interest rates by 25 basis points (bps), following a pause in November. The bets were reaffirmed by softer UK consumer inflation figures on Tuesday, which continue to undermine the British Pound (GBP) and turn out to be a key factor acting as a headwind for the GBP/USD pair.

The UK Office for National Statistics (ONS) reported that the headline Consumer Price Index (CPI) rose 3.2% over the year in November, marking a notable slowdown from 3.6% in October and missing expectations for a reading of 3.5%. Moreover, the gauge excluding volatile food and energy items – core CPI – climbed 3.2% YoY last month, compared to consensus estimates and October's 3.4% print.

This comes on top of a rise in Britain’s unemployment rate to its highest since the start of 2021 and provides the BoE headroom to ease monetary policy further. The GBP bears, however, seem reluctant to place aggressive bets and opt to wait for more cues about the BoE's policy path before placing fresh bets. Apart from this, the lack of follow-through US Dollar (USD) buying supports the GBP/USD pair.

Despite the US Federal Reserve's (Fed) cautious outlook, traders have been pricing in the possibility of two more rate cuts in 2026 amid visible signs of a softening US labor market. Moreover, expectations for a dovish replacement of Fed Chair fail to assist the USD in capitalizing on the overnight recovery. This, in turn, warrants caution before positioning for deeper losses for the GBP/USD pair.