Following BoE rate hike, British Pound rebounds from session lows towards 1.3500

GBP/USD recovers to 1.3480 from session lows around 1.3450 following the BoE’s first interest rate increase in three years.
A unanimous BoE vote lifted the bank rate to 4%, an increase of 25 basis points.
A single interest rate increase will be insufficient, according to assessments by some policymakers.

Modest daily gains have taken GBP/USD to 1.3480 on Thursday, with the British Pound (GBP) recovering from session lows against the US Dollar (USD). The rebound follows a widely anticipated interest rate increase by the Bank of England, while some policymakers advocated additional monetary tightening. The pair has already advanced about 1.3% over the last seven days.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

In line with widespread expectations, a unanimous vote by the Bank of England’s monetary policy committee delivered a 25 basis points increase in its benchmark interest rate to 4%. Alongside the decision, the central bank lifted its Gross Domestic Product (GDP) growth forecast for 2027 from 1.1% to 1.3%. Some members also indicated that further rate increases would follow.

Attention now turns to Governor Andrew Bailey’s press release, due to begin in a few minutes. It is likely to offer more clarity on the BoE’s monetary policy plans for the near term.

A series of encouraging UK macroeconomic releases had supported the British Pound against most of its peers over the past few days. Those figures set the stage for the central bank’s first interest rate increase since August 2023.

MUFG Bank analysts believe market expectations are more hawkish than the BoE’s stance as they assess the outlook: “We expect the BoE to signal that further tightening is likely to be required but not as much as currently priced in. The UK rate market had been pricing in 4-5 hikes, although that has been scaled back as the price of oil has dropped sharply this week." Against that backdrop, a more cautious tone from Bailey seems likely to disappoint investors and prompt some reversal in the Pound.

Economic Release

What Does the BoE Interest Rate Decision Mean?

At the conclusion of each of its eight scheduled meetings a year, the Bank of England (BoE) publishes its interest rate decision. A rate increase accompanied by a hawkish assessment of the economy’s inflation outlook is generally positive for the Pound Sterling (GBP). Conversely, an unchanged rate or a cut, alongside a dovish view of the UK economy, is regarded as negative for GBP.

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Latest release: Thu 5 November 2026 12:00

Release frequency: Irregular

Reported figure: 4%

Market consensus: 4%

Prior reading: 3.75%

Data source: Bank of England

Economic Data Indicator

What Does the BoE Monetary Policy Report Show?

For the Pound Sterling (GBP), high inflation forecasts are generally supportive, as they point to higher interest rates; low inflation expectations, by contrast, are bearish for GBP. Published quarterly by the Bank of England, the Monetary Policy Report provides the detailed economic analysis that underpins interest rate decisions by the Bank's Monetary Policy Committee (MPC). Of greater significance is its assessment of the outlook for UK inflation over the next two years.

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Latest release: Thu 05 Nov 2026 12:00

Release frequency: At irregular intervals

Actual value: -

Consensus estimate: -

Previous reading: -

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