The British Pound (GBP) starts the Bank of England (BoE) monetary policy week on a dovish note versus its major peers. However, the British currency is bracing for volatility and may face selling pressure this week amid a flurry of economic data releases and strong expectations that the Bank of England (BoE) is expected to cut interest rates by 25 basis points to 3.75%.
Analysts at Deutsche Bank expect the Bank of England to cut interest rates by 25 basis points, with a 5-4 vote split amid signs of easing inflationary pressures and a softer labor market. In October, the UK’s core CPI – which excludes volatile components such as food, energy, alcohol and tobacco – grew by 3.4% year-on-year, the lowest figure since March.
Ahead of the Bank of England’s policy announcement, UK CPI data for November will be published on Wednesday, which is expected to show that core inflation remained at 3.4%.
UK labor market data for the three months to October and preliminary data for the global Standard & Poor’s Purchasing Managers’ Index (PMI) for December are due to be released on Tuesday. Employment data is expected to show that the unemployment rate accelerated further and wage growth slowed.
The price of the British pound today
The table below shows the percentage change of the British Pound (GBP) against the major currencies listed today. The British pound was the strongest against the New Zealand dollar.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | -0.02% | -0.14% | -0.54% | -0.01% | 0.05% | 0.29% | 0.00% | |
| euro | 0.02% | -0.12% | -0.55% | 0.00% | 0.07% | 0.32% | 0.02% | |
| GBP | 0.14% | 0.12% | -0.41% | 0.13% | 0.19% | 0.43% | 0.14% | |
| JPY | 0.54% | 0.55% | 0.41% | 0.55% | 0.62% | 0.86% | 0.57% | |
| Canadian | 0.01% | -0.01% | -0.13% | -0.55% | 0.06% | 0.31% | 0.02% | |
| Australian dollar | -0.05% | -0.07% | -0.19% | -0.62% | -0.06% | 0.24% | -0.07% | |
| New Zealand dollar | -0.29% | -0.32% | -0.43% | -0.86% | -0.31% | -0.24% | -0.29% | |
| Swiss franc | -0.00% | -0.02% | -0.14% | -0.57% | -0.02% | 0.07% | 0.29% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select the British pound from the left column and move along the horizontal line to the US dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
The British pound is trading higher against the US dollar ahead of the US non-farm payrolls data
- The British pound rose to approximately 1.3385 against the US dollar during the European trading session on Monday. The GBP/USD pair rose as the US dollar traded lower ahead of US non-farm payrolls (NFP) data for October and November, which is scheduled to be published on Tuesday.
- At the time of writing, the US Dollar Index (DXY), which measures the value of the dollar against six major currencies, was trading lower near an eight-week low of 98.13.
- Investors will closely monitor US employment data as it will influence market expectations about the Federal Reserve’s monetary policy outlook. The Fed has cut interest rates by 75 basis points at its last three monetary policy meetings, and officials’ comments indicated that the main driver behind the interest rate cuts was weak labor market conditions.
- San Francisco Fed President Mary Daly said Friday in a LinkedIn post that she favors interest rate cuts, adding that “inflation is very high and the labor market is getting softer, but we cannot let the labor market falter.”
- On Tuesday, investors will also focus on October US retail sales and December S&P global PMI data.
- Overall, the pound looks optimistic as the US dollar remains close to an eight-week low amid growing expectations that the Federal Reserve (US central bank) will deliver more interest rate cuts in 2026 than officials indicated in last week’s dot chart.
- According to the CME FedWatch tool, there is a 64.3% chance that the Fed will cut interest rates at least twice by the end of 2026. These market bets challenge the Fed’s recent bullet chart, which showed policymakers expect the federal fund rate to fall to 3.4% by 2026, suggesting just one rate cut from current levels of 3.50%-3.75%.
Technical Analysis: GBP/USD seeks to break through the 1.3400 level
GBP/USD is trading at 1.3385 at the time of writing. The 20-day Exponential Moving Average (EMA) is rising at 1.3286, and the pair is holding above it, keeping the near-term bias elevated.
A 14-day Relative Strength Index (RSI) at 61 reflects positive momentum without overbought conditions.
Measured from the high of 1.3783 to the low of 1.3008, the 38.2% retracement was cleared at 1.3304, supporting the recovery tone. The 50% retracement at 1.3395 indicates immediate resistance, and a break higher would extend the retracement towards the 61.8% Fibonacci retracement at 1.3488. Failure to cross this barrier may result in consolidation returning towards the moving average.
The trend remains supported as the price above the 20-day EMA continues bullish, although a drop below 1.3286 would open the door for further downside towards the December low at 1.3180.
(Technical analysis of this story was written with the help of an artificial intelligence tool)
