British Pound loses ground as Oil risks cloud BoE’s hawkish outlook

• GBP/USD slips 0.11% as Middle East tensions lift energy prices.
• BoE's Mann warns persistent inflation could fuel wage-price pressures.
• Markets price 90% odds of November BoE hike ahead of US CPI.

The Pound Sterling retreats some 0.11% against the Greenback on Monday amid a scarce economic docket on both sides of the Atlantic, but geopolitics continued to drive price action amid developments in the Middle East and the prolongation of the Russia-Ukraine conflict. The GBP/USD trades at 1.3217 after peaking near 1.3261.

GBP/USD retreats from 1.3261 as geopolitical tensions overshadow growing BoE tightening expectations

Market mood has improved, even though Houthi attacks on Saudi Arabia and  Tehran’s continuing to strike vessels in the Strait of Hormuz capped US equity futures advances and drove energy prices higher. Over the weekend, US President Trump rhetoric that Russia and Ukraine had agreed to a ceasefire of energy installations seems fragile after Moscow attacked a power plant.

Ukraine’s President Volodymyr Zelenskyy warned that strikes will continue if Russia’s offence against infrastructure persists. He added that he knew from the media about the truce announced by Trump.

Aside from this, investors' focus would be on updates on inflationary pressures in the US. The release of the Consumer Price Index (CPI) on October 14, followed by the Producer Price Index (PPI) on October 15, would pave the way for interest rate decisions. Along with this, speeches by Fed policymakers will keep traders entertained before crucial economic data releases.

In the UK, Prime Minister Andy Burnham is sending mixed signals; he said he will work to secure a deal with the European Union on their future relationship.

Aside from this, Bank of England Monetary Policy Committee member Catherine Mann said that UK inflation reaching near 4% by the end of the year could ignite a wage-price drift. She stated that embedded inflation threatens to deanchor inflation expectations over the long term, as services inflation is “significantly harder” to bring down without further rate hikes.

Prime Terminal indicates that market participants assign about a 90% probability that the BoE will raise rates at the upcoming meeting on November 5. They also anticipate a series of rate hikes in 2027, which would increase the base rate to 4.75% within a year, up from 3.75% now.

The UK economic docket will feature speeches by BoE officials, culminating in the Bank of England (BoE) Governor Andrew Bailey appearance at the IMF and World Bank annual meetings.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3212, keeping a clear bearish near-term bias as spot holds well below the clustered resistance formed by the long-term simple moving averages around 1.3434 and the descending trend-line barriers at 1.3419 and 1.3291. The latest Relative Strength Index (14) reading around 37 stays below the neutral 50 line but away from oversold territory, which suggests persistent downside pressure rather than capitulation as the pair grinds lower beneath its former rising trend supports, now acting as overhead supply.

On the topside, initial resistance is seen near 1.3291 at the earlier descending trend-line break, ahead of a dense cap between roughly 1.3360 and 1.3434 where the reclaimed rising trend line and the higher downtrend barrier at 1.3419 converge with the broader simple moving average cluster. A stronger corrective recovery would need to clear that band and then 1.3606 to signal that bears are losing control, while failure to reclaim 1.3291 keeps the path of least resistance skewed to further weakness toward prior lows not yet visible in the current indicator set.

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