GBP/USD surges after BoE's unanimous pivot catches markets off guard

• Cable rallied back above 1.3400 and tested the 50-day EMA after a surprisingly hawkish 9-0 vote to hold rates.
• The BoE held rates at 3.75% in a unanimous 9-0 vote, far more hawkish than the expected 7-2 split.
• Markets are now pricing in two BoE rate hikes this year as inflation projections get revised sharply higher.
• The Fed held rates on Wednesday, still projecting one cut this year, but February PPI came in well above forecast, reinforcing the higher-for-longer narrative.

GBP/USD rallied nearly 1.3% on Thursday, climbing back above the 1.3400 handle to close around 1.3430 in a session defined by broad US Dollar weakness and a hawkish Bank of England (BoE) surprise. The pair opened near its lows close to 1.3250 before surging higher and tapping a key moving average at the session high near 1.3470. The move marks the strongest single-day rally in several weeks and partially unwinds the steep sell-off from the late-January high near 1.3870.

The Bank of England held rates at 3.75% as expected, but the unanimous 9-0 vote stunned markets that had positioned for a 7-2 split with two members favouring a cut. The previous decision in February was a narrow 5-4 hold, making Thursday's swing to full consensus a significant hawkish shift. Governor Andrew Bailey warned the BoE "stands ready to act" if inflation becomes more persistent, and the Monetary Policy Committee (MPC) revised its Q3 inflation forecast sharply higher to around 3.5%, up from 2.0% in February, driven primarily by surging energy costs from the Iran conflict. MPC member Catherine Mann said her view had shifted toward a longer hold "or even a hike," while even the traditionally dovish Swati Dhingra acknowledged rates may need to rise if oil disruption continues. Earlier in the session, UK employment data painted a mixed picture, with the ILO unemployment rate holding at 5.2% (beating the 5.3% forecast) and employment change coming in at 84K, though average earnings excluding bonuses slowed to 3.8% from 4.1%.

On the US Dollar side, the Federal Reserve (Fed) held rates at 3.50%-3.75% on Wednesday and still projects one cut this year, but Chair Jerome Powell flagged elevated uncertainty from the Iran war, and the updated dot plot showed seven of 19 officials now expect no cuts at all in 2026. The Greenback gave back Wednesday's gains on Thursday as traders digested the BoE's hawkish repricing alongside softening US new home sales, which fell 17.6% MoM.

GBP/USD daily chart

Technical Analysis

In the daily chart, GBP/USD trades at 1.3427. The near-term bias is neutral with a mild downside tilt as spot holds just below the gently descending 50-day EMA near 1.3452, while remaining comfortably above the flatter 200-day EMA around 1.3373, leaving the pair trapped in a broad mean-reversion band. Stochastic RSI has bounced from oversold territory but remains in the lower half of its range, suggesting that bearish momentum has eased without handing clear control to buyers, and price action reflects a lack of directional conviction after the recent pullback from the mid-1.36s.

Initial resistance aligns at the 50-day EMA around 1.3452, with a daily close above this level needed to open the way toward the 1.3550 area, where recent swing highs cluster. A break beyond 1.3550 would expose the 1.3620/1.3650 zone, which capped advances earlier in the month. On the downside, immediate support emerges near 1.3375, close to the 200-day EMA, and a clear move below there would shift the bias more decisively bearish toward 1.3320, followed by the 1.3250 region. Only a sustained hold above 1.3450 would start to neutralize the current downside skew and re-establish upward traction toward the recent range highs.

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