Can the British Pound hold near 1.34 as BoE hike bets eclipse Fed doubts?

Resilient Sterling buying nudges GBP/USD towards 1.3400.
US-UK rate gap could disappear as markets fully price in a November BoE hike.
Robust GDP and inflation fail to prevent December Fed hike probability slipping to 70%.

Sterling buying keeps GBP/USD near 1.3400, with the Pound Sterling gaining 0.04% against the US Dollar. Traders appear confident of a Bank of England (BoE) rate increase next week, even as they scale back hawkish Federal Reserve bets despite Thursday’s robust US data.

Can November BoE hike expectations keep GBP/USD supported as December Fed bets fade?

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

Investors are reducing their expectations of a Federal Reserve rate increase despite US figures that would normally strengthen the case for one. The economy expanded by a robust 3.4% YoY in Q3, far exceeding forecasts. Inflation consequently remains elevated, with Core PCE at 3.1% YoY, above September’s reading but consistent with expectations. According to Prime Terminal, the implied probability of a Fed hike has declined to 70% from around 84% on Wednesday following the Fed’s decision.

Meanwhile, US equities are under heavy selling pressure, particularly technology shares. The Nasdaq has dropped over 3% following what a Bloomberg article described as “disappointing tech earnings”.

Investors responded positively to the UK budget. Finance Minister John Healey delivered the first budget of PM Andy Burnham’s administration, adhering to the fiscal rules set by former Chancellor Reeves.

Separately, expectations are for the Bank of England to lift the Bank Rate to 4%, with swaps markets assigning a 100% probability to the move. Should the BoE deliver the anticipated increase, GBP/USD would be positioned to extend its recovery as the US-UK interest rate differential narrowed to 0.

Which releases will shape next week’s market calendar?

A busy US economic calendar awaits next week, with October’s ISM Manufacturing and Services PMI releases in focus alongside a series of employment reports. Labour market releases comprise JOLTS, ADP Employment Change and Initial Jobless Claims, culminating in the week’s main release, Nonfarm Payrolls.

GBP/USD Price Forecast: Can the bullish technical bias hold?

Chart Analysis GBP/USD — Daily price chart for GBP/USD

Trading at 1.3392 on the daily chart, GBP/USD retains a modestly bullish short-term bias above the cluster of three simple moving averages near 1.3380. This points to underlying buying interest after the pair regained the former resistance trend line at 1.3251, which now provides structural support. A descending resistance trendline is being tested, with a break point near 1.3391. Meanwhile, the Relative Strength Index (14) reads 56.7, indicating supportive momentum without an overbought signal yet.

A convincing break above the nearby trend-line pivot at 1.3391 would bring the next resistance levels into focus: rising former support lines around 1.3656 and 1.3833 that now act as resistance. If prices retreat, the 1.3392 area offers initial support, ahead of the three simple moving averages at 1.3380 and the regained descending trend line near 1.3251. A breach of the latter would erode the prevailing bullish bias and leave room for a steeper corrective decline.

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

How is the Pound Sterling performing today?

The British Pound’s strongest performance today was against the Euro. The table below presents the British Pound’s (GBP) percentage movements against the major currencies listed.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.22%	-0.08%	-0.20%	-0.25%	-0.06%	-0.01%	-0.07%
EUR	-0.22%		-0.30%	-0.40%	-0.45%	-0.26%	-0.22%	-0.28%
GBP	0.08%	0.30%		-0.11%	-0.15%	0.03%	0.09%	0.00%
JPY	0.20%	0.40%	0.11%		-0.03%	0.15%	0.20%	0.13%
CAD	0.25%	0.45%	0.15%	0.03%		0.17%	0.23%	0.16%
AUD	0.06%	0.26%	-0.03%	-0.15%	-0.17%		0.04%	-0.02%
NZD	0.00%	0.22%	-0.09%	-0.20%	-0.23%	-0.04%		-0.06%
CHF	0.07%	0.28%	-0.00%	-0.13%	-0.16%	0.02%	0.06%

Percentage movements between the major currencies are displayed in the heat map. Read the base currency from the left-hand column and the quote currency from the top row. For instance, selecting the British Pound on the left and following its row across to the US Dollar gives the percentage movement for GBP (base)/USD (quote) in the intersecting cell.