British Pound stays subdued as US jobs and Fed hawks overshadow BoE hike

• Rates rise to 4% as BoE votes 8-1 for an increase.
• A higher UK inflation forecast of 4.4% points to risks of further policy tightening.
• A drop in US jobless claims to 189K accompanies Fed officials’ preference for gradual rate rises.

A rise in Bank of England (BoE) rates to 4% has narrowed the gap with the Fed, but failed to preserve Sterling’s earlier gains against the US Dollar. Firm US economic figures and hawkish remarks from Fed officials have put pressure on the UK currency, leaving GBP/USD trading virtually unchanged at 1.3467.

GBP/USD gives up gains as firm US data and hawkish Fed comments outweigh BoE rate rise

An 8-to-1 vote saw the BoE raise Bank Rate, while Catherine Mann favoured a 50-basis-point increase. The Bank also lifted its Q1 2027 inflation projection to 4.4%, compared with 3.2% in July, pointing to further rate rises ahead. Even so, it finds little evidence that higher energy prices are generating second-round effects.

Speaking at the press conference, BoE Governor Bailey said a further rate rise “may be warranted,” while noting that progress in the Iran conflict could ease inflationary pressures. Rather than accepting that only two increases would be necessary, he said the outcome would depend on the risks.

Within the BoE’s Monetary Policy Committee, Pill, Lombardelli and Greene, alongside Mann, see further interest rate increases ahead.

US Initial Jobless Claims declined to 189K in the week ending 31 October, from 195K, undershooting the 196K forecast and pointing to continued labour market resilience. Challenger, Grey and Christmas also reported that Challenger Job Cuts increased to 43.994K in October from 43.281K, just 2% above September’s figure. Although layoffs edged higher, employers announced plans last month to recruit 444.692K workers, a 57% increase on a year earlier.

Comments from Fed officials also drew attention. A gradual pace of rate increases is Cleveland Fed President Beth Hammack’s preference, though she said the Fed still has more work to do. Richmond Fed President Thomas Barkin likewise backed a gradual approach, echoing Hammack while warning that “broad-based” inflation is still too high.

Against this backdrop, expectations of additional BoE rate rises have left GBP/USD subdued. Its upside remains constrained by firm US employment figures and the Fed’s hawkish language, while investors continue to weigh the Democratic sweep in the US midterm elections.

With no UK releases on the forthcoming calendar, attention turns to the US Nonfarm Payrolls report.

GBP/USD Price Forecast: Bullish bias holds above technical support

At 1.3476 on the daily chart, GBP/USD retains a positive near-term bias. Spot is holding above both the latest cluster of simple moving averages around 1.3366 and rising trend-line support near 1.3360, drawn from the 1.3140 base. This suggests underlying buying interest on dips. Momentum supports that assessment: the 14-period Relative Strength Index is near 64, signalling firm buying pressure that is not yet extreme. Meanwhile, the FXS Fed Sentiment Index is settling near 144, suggesting that broader headwinds from the USD remain contained for now.

The latest reaction high near 1.3508, on the descending resistance trend line, provides the first upside barrier. Beyond it, the next downward-sloping resistance line near 1.3544 offers a stronger cap. The higher rising-trend reference at 1.3606, derived from the 1.3159 support sequence, adds to the wider overhead supply zone. Immediate downside support lies around 1.3366–1.3360, where the nearby moving-average-supported floor meets the lower rising trend line. A break below this area would undermine the bullish bias and open the way for a deeper correction towards earlier swing levels on the daily chart.

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