- GBP/USD gains traction and edges higher to 1.2730, up 0.17% on the day.
- The Bank of England (BoE) hiked rates by 25 basis points (bps) from 5% to 5.25% in its August policy.
- Market players will monitor the US Nonfarm Payrolls due later in the day.
The GBP/USD pair holds a positive note and snaps a four-day losing streak during the early Asian session on Friday. The major pair currently trades at 1.2730, gaining 0.17% for the day.
The Bank of England (BoE) raised interest rates by 25 basis points (bps) to a 15-year high of 5.25% from 5% in its August policy meeting on Thursday. Markets anticipated that the BoE would likely hike two additional rates by the end of the year as inflation remains high. That said, the June UK Consumer Price Index (CPI) was 7.9%, nearly four times the BoE target of 2% and more than double the US rate.
BoE Governor Andrew Bailey stated on the policy outlook that the central bank expects inflation to fall to around 5% in October. He added that there is no presumed future path for interest rates.
On the US Dollar front, the US Department of Labor showed on Thursday that Initial Jobless Claims increased to 227,000 for the week ended July 29, matching expectations. The ISM Service PMI for July dropped to 52.7 from 53.9 prior and was worse than expected at 53. Lastly, Unit Labor Costs from Q2 came in at 1.6%, lower than the 2.6% expected.
Last week, the Fed decided to increase interest rates by a quarter percentage point in its July meeting. However, unlike the BoE, markets believe the Fed is nearing the end of its tightening cycle.
Market players will closely watch the US Nonfarm Payrolls due later in the day. This event could provide hints for a clear direction in GBP/USD. Also, the Unemployment Rate and Average Hourly Earnings will be released on Friday. In the absence of top-tier economic data releases from the United Kingdom, investors will digest the statement from the BoE meeting, and the USD price dynamic will be the main driver for the GBP/USD pair.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD trades sideways below 1.0450 amid quiet markets
EUR/USD defends gains below 1.0450 in European trading on Monday. Thin trading heading into the Xmas holiday and a modest US Dollar rebound leaves the pair in a familair range. Meanwhile, ECB President Lagarde's comments fail to impress the Euro.
GBP/USD stays defensive below 1.2600 after UK Q3 GDP revision
GBP/USD trades on the defensive below 1.2600 in the European session on Monday. The pair holds lower ground following the downward revision to the third-quarter UK GDP data, which weighs negatively on the Pound Sterling amid a broad US Dollar uptick.
Gold price holds comfortably above $2,600 mark; lacks bullish conviction
Gold price oscillates in a range at the start of a new week amid mixed fundamental cues. Geopolitical risks continue to underpin the XAU/USD amid subdued US Dollar price action. The Fed’s hawkish stance backs elevated US bond yields and caps the pair’s gains.
The US Dollar ends the year on a strong note
The US Dollar ends the year on a strong note, hitting two-year highs at 108.45. The Fed expects a 50-point rate cut for the full year 2025 versus 4 cuts one quarter earlier, citing higher inflation forecasts and a stubbornly strong labour market.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.