British Pound steadies near 1.3400 amid BoE rate hike expectations

• GBP/USD flatlines around 1.3390 in Monday’s Asian session.
• Markets are heavily pricing in expectations that the BoE will raise the Bank Rate to 4.0% at its November policy meeting.
• Traders brace for the BoE rate decision on Thursday ahead of US jobs data.

The GBP/USD pair holds steady near 1.3390 during the Asian trading hours on Monday. Traders prefer to wait on the sidelines ahead of the key events later this week. The Bank of England (BoE) interest rate decision will be in the spotlight on Thursday. On Friday, attention will shift to the US jobs data for October.

Economists polled by Reuters expect the ‌BoE to raise the Bank Rate to 4.0% from 3.75% at its November policy meeting on Thursday. This would be its first hike since August 2023, when inflation was still more than the BoE’s 2% target. The BoE hawkish bets could provide some support to the British Pound (GBP) against the US Dollar (USD).

"While we don't expect a clear steer from the Committee on how many hikes they're planning, it's possible that the meeting minutes or Bailey ... signal that Bank Rate is unlikely to reach the level that is priced in by financial markets," said Alexander Harvey, UK economist at consultancy Oxford Economics.

The US midterm elections and employment report will be closely watched this week. The Nonfarm Payrolls (NFP) is projected to show a rise of 65,000 in September, while the Unemployment Rate is estimated to stay unchanged at 4.2% during the same period. Any signs of improvement in the US labor market could lift the Greenback and act as a headwind for the major pair in the near term.

GBP support holds but higher bar emerges as BoE tightening already priced in

Strategists at OCBC highlight that the Pound has “held up better than expected despite the fiscal strain from higher energy costs,” with the latest UK Budget seen as a key stabilising factor. They note that the Budget “avoided adding to those concerns,” as it “stayed within the fiscal rules and preserved GBP15bn of headroom against the stability rule, even after absorbing some of the impact from the Middle East conflict.”

OCBC adds that the broader UK backdrop “remains relatively supportive.” Growth has “proved resilient,” with the OBR upgrading its “2026 growth forecast to 1.2%.” In their view, “greater political stability and fiscal discipline should continue to offer GBP some relative support,” while “closer UK-EU economic ties could provide an additional medium-term tailwind.”

However, the bank cautions that “the easy gains may be behind us.” OCBC points out that markets are “already pricing an aggressive Bank of England tightening cycle, with a November hike heavily discounted and substantially more tightening priced into 2027.” With “plenty of tightening already in the price,” they conclude that “the bar for the next leg higher in GBP is getting increasingly high.”

Greene flags stalled wage disinflation, keeping GBP rate-cut hopes in check

BoE's Greene scores 7.4/10 on FXS Speechtracker, exactly in line with Greene’s historic average, signaling a consistent hawkish tone rather than an escalation. Emphasis that wage disinflation has stalled at levels above those compatible with 2% inflation, alongside a belief that policy should proactively lean against second-round inflation risks, reinforces a bias toward keeping UK rates higher for longer and supports GBP on the margin.

Greene’s remark that the risk of second-round effects is greater than previously thought, even as forward-looking data point to pay growth closer to 3.5% and the economy shows surprising resilience, suggests limited appetite for near-term easing. The indication that labor market slack may have peaked underscores concern that renewed wage pressures could re-emerge, aligning the speech with a steady-to-hawkish stance that tempers expectations for aggressive BOE rate cuts and underpins GBP relative to peers.

Technical Analysis: GBP/USD holds a mildly bullish tone in the near term

In the daily chart, GBP/USD maintains a mildly bullish near-term bias as it holds above the 100-day simple moving average (SMA) and the Bollinger Bands’ middle SMA. Price action sits below the upper Bollinger band, suggesting room for further upside while the Relative Strength Index (14) near 56 keeps a constructive tone without entering overbought territory.

On the topside, immediate resistance is seen at the upper Bollinger band near 1.3450, where recent gains could start to face supply. On the downside, initial support aligns with the 100-day SMA at 1.3385, followed by the Bollinger middle band at 1.3310, with a deeper safety net emerging at the lower Bollinger band near 1.3175 if corrective pressure extends.

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