GBP/USD: Surprise vote split – OCBC

Pound Sterling (GBP) rose on BoE decision. GBP was last at 1.3440, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Daily momentum shows tentative signs of turning mild bullish

"MPC delivered a 25bp cut to bring policy rate to 4%, as widely expected but vote outcome caught markets by surprise. A re-vote was required after the initial vote saw a 3-way split of 4 members voting for hold, 4 members voting for 25bp cut and 1 member voting for 50bp cut. Some members warned that higher food prices would drive inflation higher."

"BoE Deputy Governor Ramsden said that the nature of the persistence of inflation has surprised him. Governor Bailey said the path continues to be downwards but added that was now “genuine uncertainty” over the scope for further cuts because BoE was balancing risks of a sharper downturn in activity against the risk of inflation failing to ease as forecast. Markets are now only pricing in 70% chance of a 25bp cut by end-2025."

"Daily momentum shows tentative signs of turning mild bullish while the rise in RSI moderated. Next resistance at 1.35 levels (50 DMA). Support at 1.34 (21 DMA), 1.3360 (100 DMA) and 1.3140 (38.2% fibo retracement of 2025 low to high). We look for consolidation in 1.33 – 1.35 range."