British Pound finds fresh momentum as BoE hawks set stage for US CPI
- GBP/USD gains 0.28% as November BoE tightening expectations strengthen.
- BoE's Greene warns delayed tightening risks fueling persistent inflation pressures.
- IMF upgrades UK growth outlook to 1.3% but flags stagflation risks.
The Pound Sterling registers gains against the US Dollar on Tuesday, up 0.28% as investors seem confident that the Bank of England (BoE) will raise rates at its November meeting, while they brace for the release of US inflation figures. The GBP/USD trades at 1.3244.
GBP/USD advances toward 1.3250 as UK policy divergence supports Sterling ahead of US CPI
An improvement in market mood weighed on the Greenback, even though most US economic data was mixed. The ADP Employment Change 4-week average dipped from 25.25K to 24.75K, while Existing Home Sales improved from 3.98 million to 3.99 million, exceeding forecasts of 3.96 million, up 1.5% MoM in September.
Two Federal Reserve officials crossed the wires. Chicago’s Fed Austan Goolsbee said that the jobs market is very stable, growth has been solid and that “If inflation remains persistent, then I think it’s clear what the Fed has to do.”
Earlier, Fed Governor Christopher Waller spoke about AI, saying that the buildout is definitely having an impact on US yields and that they could do some of the Fed’s work on demand and that inflation expectations are well anchored.
The International Monetary Fund (IMF) said it expects the UK economy to grow by 1.3% in 2026, up from a previous forecast of 0.5%, but warned of a potential “stagflation” scenario in which inflation and the unemployment rate could rise.
The Pound was supported by solid Retail Sales data from the British Retail Consortium and by hawkish comments from Bank of England policymaker Megan Greene. Greene warned that second-round inflationary effects could emerge if the central bank fails to raise rates soon.
Investors' focus shifts to the release of the US Consumer Price Index (CPI) figures. In the UK, Gross Domestic Product (GDP) data is expected on October 15, while the focus remains on the Autumn Budget release on October 28.
GBP/USD Price Forecast: Technical outlook
In the daily chart, GBP/USD trades at 1.3248, keeping a bearish near-term bias as spot holds below the cluster of simple moving averages (SMA) and trend-line levels. The latest triple SMA reading around 1.3430 sits decisively above price, reinforcing the idea of a capped market, while the downward-sloping resistance line derived from 1.3869 now comes in near 1.3289, limiting any corrective bounces. A Relative Strength Index (RSI) at 42.35 stays below the midline, hinting at persistent downside pressure rather than a full recovery phase.
On the topside, initial resistance is seen at the former resistance trend-line break area around 1.3289, ahead of the descending barrier from 1.3653 near 1.3417. Above that, the grouped daily SMAs around 1.3430 form a dense technical ceiling, followed by higher structural caps at the upward-sloping support lines turned resistance at 1.3588 and 1.3779. With no clear nearby support levels from the current dataset, the pair would likely need to reclaim the 1.3289 zone to ease immediate selling pressure, while sustained trading below the moving averages keeps risks skewed toward further downside exploration.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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