British Pound softens to near 1.3250 as elevated US yields outweigh BoE’s hawkish tone

The GBP/USD pair loses ground to near 1.3250 during the early Asian trading hours on Tuesday. US Treasury yields ‌remain above 5% at multi-decade highs, supporting the US Dollar (USD) against the British Pound (GBP). Traders will keep an eye on the Fedspeak later on Tuesday. 

Energy supply risks and robust US economic data have raised inflation concerns and prompted traders to price in further Federal Reserve (Fed) rate hike bets. Additionally, the rise in long-end Treasury yields also underpins the Greenback and creates a headwind for the major pair. 

"What's happening is that you've got the US rejecting the Iranian offer and oil prices jumped, pushing upward pressure on US yields, and that is what's lifting the dollar more broadly," said Marc Chandler, chief market strategist at Bannockburn Forex.

On the other hand, hawkish remarks from the Bank of England (BoE) policymakers could lift the Cable in the near term. BoE Deputy Governor Ramsden said on Monday that there could be a case for raising the Bank Rate if upside pressure on the inflation outlook keeps building.

Ramsden was part of the 6-3 majority on the BoE's Monetary Policy Committee who voted to leave interest rates unchanged this month. Unlike the US central bank, the BoE has not raised interest rates since the start of the Iran war, partly because its policy stance was already restrictive.

Pound outlook clouded as UK growth lags and BoE faces tougher policy mix

Analysts at HSBC warn that the Pound is likely to remain under pressure in the near term, highlighting that "weak UK labour demand and sluggish private sector momentum could weigh on the GBP in the near term, particularly as the US economy is looking more resilient." They note that markets are "already pricing around 100bp of tightening from the Bank of England by July 2027," but caution that "higher energy prices create a difficult policy mix: inflation risks are rising even as growth momentum faces a challenging outlook," leaving the BoE navigating a more complex backdrop for GBP/USD.

Ramsden flags upside inflation risks, supports firmer GBP

BoE’s Ramsden scores 8.4/10 on FXS Speechtracker, notably above the historic 7.1/10 baseline, signaling a stronger-than-usual policy impact. The emphasis on external inflation pressures from energy, weather and AI-related supply chains, alongside domestic indirect effects in food prices and potential second-round effects, points to heightened vigilance on persistent price risks.

By stating that risks to the inflation outlook have tilted to the upside and that continued upside pressures could justify increasing Bank Rate, Ramsden delivers a clearly hawkish shift versus the average tone. This combination of elevated score and explicit openness to further tightening is supportive for GBP, especially if incoming data validate the upside inflation narrative.

Technical Analysis: GBP/USD remains capped under the 100-day SMA

In the daily chart, GBP/USD keeps a bearish near-term bias as spot remains capped beneath the Bollinger Bands simple moving average (SMA) and the 100-day SMA. Price trades closer to the lower half of the recent Bollinger envelope, while the Relative Strength Index (RSI) at 30.0 hovers just above oversold territory, hinting that while downside pressure persists, the sell-off is stretched rather than impulsive.

On the topside, initial resistance is located in the 1.3410–1.3415 cluster formed by the Bollinger middle band and the 100-day SMA; a daily close above this area would be needed to ease the current bearish tone and open the door toward the upper Bollinger band near 1.3645. On the downside, the lower Bollinger band at 1.3175 stands as the next support level; a break under this floor would reinforce the prevailing downside bias and expose further weakness toward the mid-1.31s.

(The technical analysis of this story was written with the help of an AI tool. Know more.)