FX.co ★ Sud | GBP/USD

The GBP/USD pair traded quietly and with some volatility around the 1.3405 level during early European trading on Tuesday, as market participants adopted a cautious "wait-and-see" approach ahead of a series of high-stakes events later this week. These anticipated catalysts include the critical U.S. midterm elections, the upcoming interest rate decision from the Bank of England, and U.S. non-farm payroll data for September, along with official employment figures. Central bank dynamics remain a primary focus for sterling traders; the Bank of England is widely expected to raise its key interest rate by 25 basis points to 4.00% at its meeting scheduled for this Thursday in November. Should this occur, it would mark the Bank of England’s first rate hike since August 2023, driven by persistent inflationary pressures that remain well above the central bank’s 2% target. Analysts at ING noted that while further rate hikes in early 2027 remain possible, the money market currently appears to be overestimating the aggressiveness of the Bank of England’s monetary tightening policy. Consequently, traders will be closely monitoring the press conference held by Bank of England Governor Andrew Bailey, as well as the latest Monetary Policy Report, for guidance on future policy. A hawkish emphasis on persistent inflation could provide fresh upward momentum for the British pound against the US dollar. Regarding the policy stance, foreign exchange strategists at Brown Brothers Harriman (BBH) argue that strong UK inflation data and resilient economic activity provide a compelling case for a 25-basis-point interest rate hike. They anticipate a 7-2 vote among Monetary Policy Committee (MPC) members, with Alan Taylor and Swati Dhingra—both known for their dovish leanings—likely favoring the status quo. However, BBH cautions that if the updated macroeconomic forecasts indicate a persistent output gap throughout the projection period, the currency market might begin to price in a higher interest rate trajectory, which could cap potential gains for the pound. This hawkish outlook has been reinforced by recent remarks from Bank of England policymaker Megan Greene—who received a score of 7.4 out of 10 on the FXStreet Speechtracker. Greene expressed concern that the decline in wage growth might stall well above the 2% inflation target, citing expectations for future wage growth of around 3.5% and signs that the cooling of the labor market may have already peaked. It called for a proactive approach to counter the risk of a second wave of inflation, signaling a deep reluctance to support rapid monetary easing—a stance that reinforces a disinflationary bias and provides structural support for the British pound. From a technical perspective, the GBP/USD pair maintains a positive pattern on the daily chart, trading comfortably around the 100-day simple moving average (SMA) at 1.3385 and the 20-period Bollinger Band at 1.3320. This stability suggests that the pair’s near-term uptrend remains intact following its recent rebound from a period of low volatility. Meanwhile, the 14-day Relative Strength Index (RSI) at 57.9 reflects growing bullish momentum without having entered overbought territory, indicating potential for further gains. On the upside, immediate technical resistance lies near the upper Bollinger Band at 1.3465. A successful breakout above this level would pave the way toward the July 15 high of 1.3558, and ultimately, the August 21 high of 1.3675. Conversely, on the downside, initial dynamic support is found near the 100-day SMA at 1.3385, followed by the middle Bollinger Band at 1.3320. A decisive break below these key technical levels would expose the low recorded on October 15 at 1.3184, followed by secondary support near the lower boundary of the Bollinger Band at 1.3172.