Pound Sterling flat lines vs USD as traders await BoE policy update and US PCE Price Index
The GBP/USD pair struggles to capitalize on a modest Asian session uptick to the 1.3500 neighborhood, though it holds above the 100-day Simple Moving Average (SMA). Spot prices currently trade around the 1.3475-1.3480 region, nearly unchanged for the day, as traders look forward to the Bank of England (BoE) event and the US inflation data for a fresh impetus.
The UK central bank is scheduled to announce its policy decision later today and is expected to keep interest rates on hold. The current market pricing, however, points to a greater possibility of two rate hikes in 2026 amid inflation risks stemming from the war-driven surge in energy prices. Hence, the focus will be on the accompanying policy statement and the post-meeting press conference, where comments from BoE Governor Andrew Bailey will be scrutinized for cues about the interest rate path. The outlook, in turn, will play a key role in influencing the British Pound (GBP).
Traders will further take cues from the US Personal Consumption Expenditures (PCE) Price Index, which should further provide some meaningful impetus to the GBP/USD pair later today. In the meantime, the US Federal Reserve's (Fed) hawkish tilt, along with the US-Iran stalemate, might continue to act as a tailwind for the US Dollar (USD) and cap the upside for the currency pair. The Fed's decision to keep interest rates unchanged on Wednesday saw the highest number of dissents since 1992, with three policymakers voting against the accommodative tone in the policy statement.
Traders were quick to reduce bets on any further easing by the Fed in 2026; instead, they are now pricing in over a 10% chance of a rate increase by the year-end. On the geopolitical front, US President Donald Trump rejected Iran's new proposal to end the two-month conflict and reiterated that there will be no peace deal with the Islamic Republic unless it agrees to give up the nuclear program. Trump further added that the naval blockade of Iranian ports will continue, which keeps geopolitical risks in play. This, in turn, favors the USD bulls and should keep a lid on the GBP/USD pair.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Federal Reserve Chairman Waller: AI is the most profound economic transformation of my lifetime; the FOMC meetings in October and December are crucial
Walsh emphasized that the Federal Reserve is clearly committed to achieving price stability and does not support prematurely predicting the outcome of monetary policy meetings or disclosing possible policy actions for the remaining meetings in 2026 in advance. Inflation is not an issue unique to the United States. Currently, most regions around the world are tightening monetary policy simultaneously, which means no country can "free ride." Walsh also announced that the Federal Reserve’s Productivity and Employment Working Group will hold a field hearing in the San Francisco Bay Area on November 16 to examine a variety of issues, including the economic impact of artificial intelligence.
Will the expansion of U.S. Treasury repo become normalized? Will long-term bond issuance be reduced? Tonight, the U.S. Treasury Department will release a key signal.
Deutsche Bank pointed out that there are two key aspects to this survey: first, whether the expansion of long-term U.S. Treasury repo operations will become permanent; second, whether there will be a direct discussion about "eliminating 20-year U.S. Treasuries." Among them, the possible abolition of 20-year U.S. Treasuries is an extremely impactful potential topic. If this is explicitly addressed, it would be seen as a major policy signal from the Treasury Department in response to high yields, and is expected to trigger significant turbulence in the bond market.
SUI Eyes 528% Upside: Key Breakout Levels From $1.34 to a Potential $6.70 Target
Wall Street sets a positive tone for the long-term prospects of AI; the Fed's interest rate path for October remains uncertain! Cooling US Treasury yields open a window for tech sector rebound?
Waller’s series of speeches at the IMF reinforced the view that cutting-edge AI technology will fundamentally reshape the economy in the long term, but he did not commit to a pause in rate hikes in October. For global semiconductor stocks, which have recently experienced heavy sell-offs and entered a correction phase, the positive aspect is that he did not further intensify short-term rate hike expectations.
Crypto prices
More
