British Pound subdued despite BoE hike as US jobs, Fed hawks dominate

• BoE raises rates to 4% in an 8-1 split decision.
• UK inflation forecast jumps to 4.4%, signaling further tightening risks.
• US jobless claims fall to 189K as Fed officials favor gradual hikes.

The Pound Sterling erases its previous gains against the US Dollar even though the Bank of England (BoE) raised rates to 4%, narrowing the differential with the Fed, but solid US data and hawkish comments by Fed officials weighed on the UK currency. The GBP/USD trades at 1.3467, virtually unchanged.

GBP/USD surrenders earlier gains on strong US data and hawkish Fed rhetoric offsetting BoE tightening

The BoE increased the Bank Rate in an 8-to-1 split decision, with Catherine Mann voting for a 50-basis-point rate hike. Of note, the BoE raised its inflation forecast to 4.4% in Q1 2027, up from 3.2% in July, suggesting further rate hikes lie ahead. Nevertheless, the BoE sees limited evidence of second-round effects from higher energy prices.

At the press conference, BoE Governor Bailey said another rate increase “may be warranted,” adding that progress in the Iran conflict could limit inflationary pressures. He rejected the idea that just two rate hikes are needed; instead, he said that it would depend on risks.

Among the Monetary Policy Committee, BoE’s Pill, Lombardelli, Greene, and, obviously, Mann see additional rate hikes in the future.

In the US, the labour market remains solid as Initial Jobless Claims for the week ending October 31 dipped from 195K to 189K, below forecasts of 196K. Also, the Challenger Job Cuts for October rose from 43.281K to 43.994K, up just 2% from September, revealed Challenger, Grey and Christmas. Despite the uptick in layoffs, employers announced plans to hire 444.692K workers last month, a 57% jump from a year ago.

In the meantime, Fed officials crossed the wires. Cleveland Fed President Beth Hammack said that she favours a gradual approach on rate increases, adding that the Fed has more work to do. Meanwhile, Richmond Fed President Thomas Barkin said that “broad-based” inflation remains too high and echoed Hammack's comments about a gradual approach.

Given the backdrop, GBP/USD remains subdued as traders expect further BoE rate hikes. Nevertheless, the Fed’s hawkish rhetoric and solid jobs data cap the advance as investors continue to assess the Democratic sweep in the US midterm elections.

Ahead, the UK docket is absent, but in the US, market participants eye the release of Nonfarm Payrolls.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3476. The pair holds a constructive near-term bullish bias as spot remains above the latest simple moving average cluster around 1.3366 and the rising trend-line support derived from the 1.3140 base near 1.3360, indicating underlying demand on dips. Momentum backs this stance, with the 14-period Relative Strength Index hovering around 64, suggesting firm but not yet extreme buying pressure, while the FXS Fed Sentiment Index stabilizing near 144 hints that broader USD-driven headwinds are contained for now.

On the topside, initial resistance is seen at the latest reaction high along the descending resistance trend line around 1.3508, followed by a more robust cap at the next downward-sloping resistance line near 1.3544, with the higher rising-trend reference from the 1.3159 support sequence at 1.3606 reinforcing the broader supply zone overhead. On the downside, immediate support is found at the nearby moving-average-backed floor and lower rising trend line clustered around 1.3366–1.3360, where a break would weaken the bullish tone and expose a deeper corrective phase toward prior swing levels on the daily chart.

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