The GBP/USD pair trades on a flat note around 1.3360 during the early Asian trading hours on Friday. Traders continue to assess the latest interest rate decisions and policy cues from the US Federal Reserve (Fed) and the Bank of England (BoE). The UK August Retail Sales data will be published later on Friday.
The BoEs Monetary Policy Committee (MPC) voted 6-3 to hold the Bank Rate at 3.75% on Thursday, despite inflation rising well above its 2% target. However, policymakers warned a hike was becoming increasingly likely. The three dissenters voted to enact a hike of 25 basis points (bps) to 4.0%.
A hike of at least 25 bps is widely anticipated at its next meeting in November, according to LSEG data.
On the other hand, the U.S. Federal Reserve (Fed) announced a quarter-point hike on Wednesday, its first hike since 2023. Fed Chair Kevin Warsh said on Wednesday that “the plain fact is that inflation is too high and has been for too long.” “This summers inflation readings do not tell me that underlying trends have meaningfully improved,” he added.
Traders are now pricing in nearly a 53.1% probability of another US rate hike when the Fed meets next in October, compared with nearly 44% a day ago, according to the CME FedWatch tool.
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Pound extends modest recovery as BoE hawkish hold and UK fiscal signals support GBP
Strategists at Scotiabank highlight that the Pound is “seeing marginal strength vs. the USD and extending its modest recovery in the aftermath of the BoE‘s hawkish hold.” They add that “yield spreads appear to be offering renewed support to the GBP following their recent pullback, as markets signal additional confidence in the UK’s fiscal outlook in response to the PM Burnhams budget comments.”
Technical Analysis: GBP/USD remains capped below the key resistance levels
In the daily chart, GBP/USD holds a bearish near-term bias as spot remains below a dense band of volatility and trend indicators. Price is under the 20-day Bollinger simple moving average and capped by the lower band, while the 100-day moving average at 1.3438 adds medium-term overhead pressure. The Relative Strength Index (14) at 31.3 flirts with oversold territory, hinting that downside momentum is stretched but not yet accompanied by a meaningful reclaim of resistance levels.
On the topside, immediate resistance emerges at the Bollinger lower band around 1.3365, followed by the 100-day moving average at 1.3438, which reinforces the broader bearish structure. Further up, the Bollinger middle band at 1.3515 and the upper band near 1.3670 define subsequent hurdles that bulls would need to overcome to neutralize the current downtrend. With no clear support levels from the presented indicators below spot, the pair remains vulnerable to additional selling while it trades beneath this stacked resistance zone.