British Pound nudges higher above 1.3350 despite strong US jobs data

GBP/USD edges higher to around 1.3370 in Monday’s early Asian session.
Markets price three more BoE hikes.
US NFP increased by 165,000 in October, well above the forecast.

The GBP/USD pair gains ground to near 1.3370, snapping the two-day losing streak during the early Asian session on Monday. The British Pound (GBP) strengthens against the US Dollar (USD) on a hawkish-than-expected policy stance from the Bank of England (BoE).

Last week, the BoE raised its benchmark interest rate by 25 basis points (bps) to 4.00%, marking its first rate increase in over three years. BoE Governor Andrew Bailey emphasized the war in the Middle East, which is pushing up energy prices, as the main factor in deciding future rates. Markets price three more hikes by the end of next year, more than most economists expect.

TMGM талдауы: Қаржы нарығы жаңалықтары, экономикалық күнтізбе және нарықтық шолулар

Bailey said falling oil prices following the market reacting to the US midterms would not have changed the decision made today but admitted it "obviously" has an impact on his view going forward.

On the other hand, a stronger-than-expected US Nonfarm Payrolls (NFP) report might help limit the USD’s losses. The US Bureau of Labor Statistics (BLS) revealed on Friday that the US economy added 165,000 jobs in October, compared to 60,000 recorded in September. This figure surpassed the market expectation of 65,000. Additionally, the Unemployment Rate fell to 4.1% in October from 4.2% in September.

Markets are now pricing in nearly a 79.6% chance that the Fed will raise rates in December, compared with 72.8% before the US jobs report, according to the CME FedWatch tool.

BoE hike aligns with Fed as MPC flags inflation risks into 2027

Analysts at ABN Amro highlight that the BoE has taken another step along its tightening path, noting that the central bank "raised the bank rate by 25 bps to 4.00%, matching the upper bound of the 3.75-4.00% Fed Funds Rate range." They point out that the decision was firmly supported within the committee, with "eight members" backing the increase, while "one preferred a 50-bps increase," underscoring a still-hawkish bias on the MPC. Looking ahead, ABN Amro emphasises that the committee "projected inflation to reach around 5% by mid-2027 and signalled another increase unless the Middle East conflict is resolved," suggesting that lingering geopolitical risks remain a key factor in the BoE’s policy calculus.

BoE’s Pill opens door to flexible 2026 rate path

The FXS Speechtracker score of 4.2/10, well below the historic 6.4/10 baseline for Pill, signals a notably more dovish and uncertain tone. By stressing that nothing is baked in for interest rates next year and that there is no preset upward path from spring and beyond, the speech clearly backs away from a tightening bias and emphasizes data dependence.

The remark that Bank Rate could stay on hold or even fall if growth stalls, with the key determinant being margin squeeze on companies and corporate reactions, reinforces this shift toward caution. For GBP, the combination of heightened uncertainty and explicit openness to rate cuts if growth falters leans modestly negative, suggesting reduced support for the currency compared with Pill’s usual stance.

Technical Analysis: GBP/USD holds a bearish tone under the 100-day SMA

In the daily chart, GBP/USD holds a capped tone as it sits just beneath the 100-day simple moving average (SMA). Price trades slightly above the 20-day Bollinger middle band, suggesting nearby underlying demand, but the proximity of the 100-day SMA overhead keeps the topside constrained. The Relative Strength Index (RSI) at 51.1 is broadly neutral, hinting that momentum is not yet strong enough to challenge the prevailing resistance structure.

On the downside, immediate support emerges at the 20-day Bollinger middle band near 1.3355, with a deeper cushion at the lower Bollinger band around 1.3225 if selling pressure extends. On the topside, initial resistance is located at the 100-day SMA at 1.3395, followed by a higher barrier at the 20-day Bollinger upper band near 1.3485, which would need to be reclaimed to shift the near-term bias toward a more constructive bullish outlook.

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

Pound Sterling FAQs

What is the Pound Sterling?

The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).

How do the decisions of the Bank of England impact on the Pound Sterling?

The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.

How does economic data influence the value of the Pound?

Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.

How does the Trade Balance impact the Pound?

Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

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