GBP/USD Forecast: Pound Steadies as BoE Keeps Rates at 4% Amid Split Vote
The British pound steadied near $1.3100 on Thursday after the Bank of England (BoE) voted to keep its Official Bank Rate unchanged...
Quick overview
- The British pound stabilized around $1.3100 after the Bank of England held its Official Bank Rate at 4.00%, reflecting internal divisions within the Monetary Policy Committee.
- Governor Andrew Bailey cautioned that while inflation is easing, price pressures remain high, emphasizing the need for vigilance regarding wage growth and services inflation.
- Market expectations suggest the BoE will maintain its current rate until at least early 2026, with future decisions hinging on upcoming inflation and labor data.
- Technically, GBP/USD shows signs of potential stabilization, with key resistance levels identified at $1.3120 and $1.3180, indicating a possible buy-on-breakout strategy.
The British pound steadied near $1.3100 on Thursday after the Bank of England (BoE) voted to keep its Official Bank Rate unchanged at 4.00%, marking the fifth consecutive hold. The decision, however, revealed deep divisions within the Monetary Policy Committee (MPC), with a 0–4–5 split, underscoring policymakers’ struggle to balance persistent inflation risks against slowing economic momentum.
Governor Andrew Bailey maintained a cautious tone, acknowledging signs of easing inflation but warning that price pressures remain elevated. “We’re not declaring victory yet,” Bailey noted, stressing that the BoE must stay alert to wage growth and services inflation, both of which continue to run above target.
The pound’s reaction was muted, as traders digested the lack of fresh guidance on rate cuts. Market participants now see the BoE staying on hold until at least early 2026, with the next move dependent on inflation and labor data in the months ahead.
Mixed U.S. Data Caps Dollar Gains
Across the Atlantic, the U.S. dollar stabilized after a volatile midweek session. The ADP Non-Farm Employment Change showed a gain of 42,000 jobs, beating expectations of 32,000, while the ISM Services PMI rose modestly to 52.4, indicating steady but moderate expansion.
Despite the upbeat data, dollar strength stalled as traders looked ahead to remarks from FOMC member Christopher Waller later in the day. His comments could shape expectations for future rate adjustments, especially as inflationary pressures begin to soften.
GBP/USD Technical Outlook
From a technical standpoint, GBP/USD is attempting to stabilize after weeks of heavy selling. The pair recently rebounded from $1.3010, aligning with the 0% Fibonacci retracement of its August-to-September rally, hinting at short-term exhaustion among sellers.
Candlestick patterns show a hammer followed by a bullish engulfing, signaling potential for a short-term rebound. The RSI near 34 has turned upward from oversold territory, suggesting a possible shift in momentum.
Resistance lies at $1.3120 and $1.3180, where the 20-day EMA converges with the mid-channel trendline. A confirmed breakout above these could open the door toward $1.3240–$1.3320, while failure to hold above $1.3010 risks another slide toward $1.2940.
For traders, the setup favors a buy-on-breakout strategy above $1.3120, targeting $1.3240, with a stop near $1.3010.
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