GBP/USD Gives Up Early Gains Following 6-3 BoE Hold

Traders' Opinions

Summary:

GBP/USD retreats toward 1.3375 after the BoE held rates at 3.75% in a 6-3 vote. Despite three policymakers backing a hike, the Fed's higher-for-longer outlook keeps the broader policy backdrop supportive for the Dollar.

SELL GBPUSD

Close Time

CLOSED

1.33700

Entry Price

1.32700

1.35400

1.33946 +0.00372 +0.28%

29.6

Pips

Profit

1.32700

1.33404

Exit Price

1.33700

Entry Price

1.35400

The British Pound came under renewed selling pressure on Thursday after the Bank of England left interest rates unchanged at 3.75%, prompting GBP/USD to surrender its earlier gains and retreat toward 1.3375.

The decision marked the sixth consecutive meeting without a change in rates and was delivered through a 6-3 vote, broadly matching expectations. The three dissenters — Megan Greene, Catherine L Mann and Huw Pill — supported a 25-basis-point increase to 4.00%, highlighting continued concern within parts of the Monetary Policy Committee over persistent inflation risks.

Governor Andrew Bailey maintained a cautious stance on inflation, particularly given the ongoing conflict in the Middle East. The BoE acknowledged that an extended period of geopolitical instability could keep energy and commodity prices elevated and potentially justify additional monetary tightening if those pressures begin feeding more broadly into domestic prices.

However, policymakers have yet to see significant evidence of those second-round inflation effects, leaving the Bank reluctant to raise borrowing costs immediately. That balance between elevated inflation risks and limited evidence of broader price pressures contributed to Sterling's relatively weak reaction following the announcement.

The US Dollar is also undergoing a modest correction, with the Dollar Index falling around 0.2% toward 100.15 after three consecutive sessions of gains. Investors are reassessing the Federal Reserve's outlook following its latest policy decision, although the broader US rate picture remains restrictive.

NBC Economics sees the Fed's updated projections as consistent with a higher-for-longer interest-rate environment, with policymakers not anticipating rates returning to the 3.50%–3.75% range until the end of 2029. The institution sees a potential 4.25% upper bound as the peak of the current tightening phase, while the timing of eventual rate cuts could depend heavily on the durability of US economic growth.

For GBP/USD, the immediate picture therefore remains challenging. The BoE continues to acknowledge upside inflation risks, but Thursday's decision stopped short of delivering another hike, while the Federal Reserve's longer-term policy projections continue to offer underlying support to the Dollar.

Technical Analysis

GBP/USD has suffered a decisive deterioration on the 4-hour chart, with the pair falling toward 1.3370 after breaking through several important support levels. The latest selloff reinforces the sequence of lower highs and lower lows that has developed since the August peak around 1.3660, leaving sellers firmly in control of the near-term structure.

The most significant development is the break beneath the 1.3400–1.3415 support zone. This area had previously provided a floor for the pair, but the sharp move underneath it has converted the region into potential resistance. Price is currently attempting to stabilize around 1.3370, although the chart suggests any recovery from here could remain corrective.

A rebound toward 1.3400–1.3415 would therefore be important to watch. Failure to reclaim this former support would strengthen the bearish case and could provide the platform for another leg lower. Higher up, 1.3465–1.3480 represents the next major resistance area, while 1.3560 remains the broader invalidation region for the current bearish structure.

On the downside, the next substantial demand zone sits around 1.3270–1.3285. The projected path suggests GBP/USD could test this region before staging a temporary rebound. If that recovery fails to regain broken support, selling pressure could resume and expose the larger 1.3135–1.3150 demand zone.

The overall structure therefore favors a bearish continuation with corrective rebounds along the way. As long as GBP/USD remains beneath 1.3415 and particularly 1.3470, rallies are likely to remain vulnerable to renewed selling pressure. A clean break beneath 1.3270 would strengthen the case for an eventual extension toward 1.3140.

TRADE RECOMMENDATION

SELL GBP/USD

ENTRY PRICE: 1.3370

STOP LOSS: 1.3540

TAKE PROFIT: 1.3270

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GBP/USD Gives Up Early Gains Following 6-3 BoE Hold

Risk Disclosure