Near 1.34, the Pound faces a split BoE vote on 5 November

1.3400 in sight as GBP/USD rebounds for a second consecutive session.
Sterling outperforms the Euro as the Dollar weakens following the ECB decision.
6-3 hold vote precedes the BoE's next decision on Thursday, November 5.

GBP/USD is trading just below 1.3400. That puts the pair close to its session high, following a rise since ECB President Lagarde's press conference began. Its session low, just below 1.3300, was set before the European Central Bank's (ECB) decision to leave rates unchanged. The Euro reached a fresh low after that decision, while the Pound did not. As a result, GBP/USD has gained more than EUR/USD.

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At 3.75%, the UK's Bank Rate has remained unchanged since December 2025, with three of the Bank of England's (BoE) nine policymakers backing an increase in September. By contrast, the Fed, the ECB and the Bank of Japan have each raised rates in 2026. Bank Rate matches the lower end of the Fed's 3.75%-4.00% range, leaving the interest-rate differential for GBP/USD at no more than a quarter-point.

GBP/USD showed little response to a Citi and YouGov survey in which Britons' inflation expectations for the year ahead eased to 4.2% in October from 4.5%. Longer-term expectations declined to 4.0%. That is also where Bank Rate would stand following a quarter-point increase on November 5.

November 5: BoE decision and policy report

At 12:00 GMT on November 5, the BoE will release its rate decision and quarterly Monetary Policy Report. BoE Governor Bailey is scheduled to speak at 12:30 GMT. A further two votes in favour of an increase would secure a majority, changing the UK component of GBP/USD's interest-rate differential for the first time since December 2025.

Friday's US Chicago Purchasing Managers Index (PMI), due at 13:45 GMT, is forecast to ease to 56.1 from 58.8. The September job openings release follows on November 3 at 15:00 GMT, with the previous reading at 7.079 million. Both releases inform the US side of the rate differential.

1.3350: GBP/USD regains its 50-day EMA

Back above its 50-day Exponential Moving Average (EMA), which sits just above 1.3350, GBP/USD remains below its 200-day average. Around three-quarters of the decline from the October 22 high has been retraced during the two-day advance. Measured against the broader fall from the August high to the October 14 low, the recovery amounts to slightly less than half.

GBP/USD: daily price chart

Pound Sterling: key questions

Pound Sterling: what defines the currency?

Dating back to 886 AD, the Pound Sterling (GBP) is the world's oldest currency and serves as the United Kingdom's official currency. According to 2022 data, it ranks fourth globally in foreign exchange (FX) trading, representing 12% of all transactions and an average daily volume of $630 billion. Among its main currency pairs, GBP/USD, known as ‘Cable’, represents 11% of FX transactions. GBP/JPY, referred to by traders as the ‘Dragon’, accounts for 3%, while EUR/GBP makes up 2%. Responsibility for issuing the Pound Sterling rests with the Bank of England (BoE).

BoE policy: how do rate decisions affect Sterling?

Monetary policy set by the Bank of England has the greatest influence on the Pound Sterling's value. Policy decisions depend on whether the BoE has met its principal objective of “price stability”, meaning steady inflation of around 2%. Interest-rate adjustments are its main means of achieving that objective. To curb excessively high inflation, the BoE raises interest rates, increasing borrowing costs for households and businesses. GBP generally benefits because higher rates make the UK a more appealing destination for international investors' funds. Inflation that falls too low, by contrast, signals slower economic growth. The BoE will then consider cutting rates to reduce credit costs, encouraging businesses to borrow more and invest in projects that generate growth.

Economic indicators: what drives the Pound's response?

By indicating the economy's condition, economic releases can affect Sterling's value. GDP, Manufacturing and Services PMIs, and employment figures are among the indicators that can steer GBP. Sterling benefits from economic strength, which draws in more overseas investment and may prompt the BoE to raise interest rates, directly strengthening GBP. Weak economic readings, in contrast, are likely to weigh on the Pound Sterling.

Trade Balance: why does it matter for Sterling?

The Trade Balance is another important release for the Pound Sterling. Over a specified period, it records the difference between a country's export earnings and its spending on imports. Strong overseas demand for a country's exports creates additional demand for its currency as foreign buyers seek to purchase those goods. A positive net Trade Balance therefore supports the currency, while a negative balance has the opposite effect.