The GBP/USD pair is struggling to capitalize on an overnight bounce from the 1.3310 area, or a one-week low, and is oscillating in a narrow range during the Asian session on Thursday. Spot prices are currently trading around the 1.3370 area, down less than 0.10% on the day, as traders opt to wait on the sidelines ahead of the central bank’s key risk event and US consumer inflation data.
The Bank of England (BoE) is set to announce its policy decision later today, and is widely expected to cut interest rates by 25 basis points, after a pause in November. The bets were underscored by weak UK consumer inflation numbers on Tuesday, which continue to undermine the British pound and turned out to be a major factor acting as a headwind for the GBP/USD pair.
The UK Office for National Statistics (ONS) reported that the headline consumer price index (CPI) rose 3.2% over the year in November, marking a marked slowdown from 3.6% in October, and missing expectations for a reading of 3.5%. Furthermore, the measure that excludes volatile food and energy – the core CPI – rose 3.2% year-on-year last month, compared to consensus estimates and the October reading of 3.4%.
This comes in addition to the unemployment rate in Britain rising to its highest levels since the beginning of 2021, and gives the Bank of England more room to ease monetary policy further. However, sterling bulls appear reluctant to place aggressive bets and are choosing to wait for further signals on the course of the Bank of England’s policy before placing new bets. Aside from this, lack of follow-through US Dollar (USD) buying is supporting GBP/USD.
Despite the US Federal Reserve’s dovish outlook, traders were anticipating the possibility of two more interest rate cuts in 2026 amid clear signs of weakness in the US labor market. Moreover, expectations of a replacement of the Fed Chairman failed to help the US dollar benefit from the overnight recovery. This in turn calls for caution before positioning for deeper GBP/USD losses.
Economic indicator
Bank of England interest rate decision
the Bank of England The Bank of England announces its interest rate decision at the end of its eight meetings scheduled annually. If the Bank of England is hawkish on the economy’s inflationary outlook and raises interest rates, it is usually bullish for the pound. Likewise, if the Bank of England takes a pessimistic view on the UK economy and keeps interest rates unchanged, or cuts them, this will be seen as bearish for the pound.
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Next release:
Thursday 18 December 2025 at 12:00
repetition:
irregular
consensus:
3.75%
former:
4%
source:
Bank of England
