FX.co ★ Sud | GBP/USD

The British pound rose against the US dollar (GBP/USD) at the start of European trading on Tuesday, continuing its recent upward trend. Meanwhile, a sense of caution prevailed across financial markets ahead of the highly anticipated US Consumer Price Index (CPI) inflation report, due later today. The pound remains fundamentally supported, bolstered by the Bank of England’s recent monetary policy decision to raise its key interest rate by 25 basis points to 4.00%—the first such hike in over three years. Bank of England officials have warned that further monetary tightening remains a strong possibility, particularly if geopolitical instability and the conflict involving the United States and Iran continue to drive global energy prices higher. Andrew Goodwin, a senior UK economist at Oxford Economics, noted that the outcome of the Bank of England’s upcoming December meeting is currently unpredictable, as oil and gas prices remain key drivers of its policy direction. At the same time, the pound’s gains were somewhat capped by the strength of the US dollar (USD), which has continued to find support following last Friday’s robust US non-farm payrolls report. These strong labor market data have led the money markets to increase expectations for a more hawkish monetary policy stance from the Federal Reserve. Current futures prices indicate an 84% probability of a 25-basis-point interest rate hike at the Federal Reserve’s monetary policy meeting in December. In its macroeconomic commentary, ABN AMRO noted that the Bank of England’s 25-basis-point rate hike brings its policy rate in line with the upper bound of the Federal Reserve’s target range—currently 3.75% to 4.00%. The voting results within the Bank of England’s Monetary Policy Committee (MPC) revealed a clear hawkish bias: eight members supported a 25-basis-point increase, while one member voted for a 50-basis-point hike. ABN AMRO highlighted that the MPC expects inflation to rise to approximately 5% by mid-2027 and explicitly signaled further rate hikes ahead—contingent on whether geopolitical tensions in the Middle East subside. This implies that, while borrowing costs in the United Kingdom are currently on par with those in the United States, the Bank of England maintains a conditional hawkish stance. Nevertheless, subsequent policy-related statements have introduced a more dovish tone to the medium-term outlook for the British pound. Comments by the Bank of England’s Chief Economist, Huw Pill, received a "hawkish" score of just 4.2 out of 10 on the FXS Speechtracker index—well below his historical average of 6.4—signaling a more cautious policy stance and a less aggressive inclination toward tightening. Pill emphasized that the path for interest rates over the coming year remains uncertain, rejecting the assumption that rates are bound to rise starting in the spring. He noted that if economic growth in the UK were to stall, the benchmark interest rate could remain unchanged or even be cut. Pill specifically highlighted two key variables: narrowing corporate profit margins and economic resilience. This statement prompted the market to scale back expectations for continued interest rate hikes, creating downside risks for the British pound against major currencies like the US dollar and the euro. From a technical perspective, the GBP/USD pair maintains a positive structural outlook on the daily chart, trading above both the 100-day simple moving average and the middle Bollinger Band. The price is approaching the upper Bollinger Band, which currently acts as a dynamic resistance level. Meanwhile, the 14-day Relative Strength Index (RSI) has risen to approximately 57, suggesting that bullish momentum is building steadily without yet reaching overbought territory. On the upside, initial technical resistance lies at the upper Bollinger Band, near the 1.3500 level. If the price manages to break through this level and remain above it, it could target its September 9 high of 1.3568, followed by its August 21 high of 1.3675. Conversely, on the downside, the 100-day moving average (around 1.3400) serves as a key dynamic support level. Should the price fall below 1.3400 and close beneath it, it may test the middle Bollinger Band near 1.3370, followed by the October 28 low of 1.3272; a deeper pullback could lead to a retest of the lower Bollinger Band around 1.3235.