- Pound declines from earlier gains following the BOE’s monetary policy announcement.
- BOE keeps interest rates steady at 4% with a voting split of 7-2.
- Investors are anticipating unemployment claims data for the week ending September 12th.
The British pound is experiencing selling pressure against major currencies on Thursday after the Bank of England (BOE) announced its monetary policy. As anticipated, the BOE decided to maintain the rate at 4%, reflecting the majority vote of 7-2.
The decision to hold rates steady was largely predicted, especially with inflationary trends persisting in the UK. The latest Consumer Price Index shows inflation at 3.8%, marking the highest level since early 2024.
Members of the BOE’s Monetary Policy Committee, Swati Dhingra and Alan Taylor, voted for more expansion in monetary policy, while the majority opted to keep things unchanged.
Interestingly, Taylor had been expected to favor a rate cut; he previously suggested that easing monetary policy is necessary to tackle sluggish economic growth. He mentioned that restrictive monetary policy could, in fact, undermine targets and result in weak activity or inflation during a recession.
On a different note, BOE Governor Andrew Bailey’s stance is more cautious, advocating for a “gradual and prudent” approach to lessen monetary policy constraints.
Daily Digest Market Mover: Fed Indicates Additional Rate Cuts Ahead
- The pound has relinquished its early gains post the BOE’s announcement, stabilizing around 1.3610 against the US dollar. The dollar is also struggling to maintain recovery from Wednesday.
- The US Dollar Index (DXY), measuring the dollar against six major currencies, is facing challenges above 97.00.
- On Wednesday, the Fed announced a 25 basis point rate cut, reducing rates to a range of 4.00%-4.25%. This marks the first rate cut of the year, despite inflation being well over the 2% target, as the central bank adjusts to slowing job growth.
- Chairman Jerome Powell noted that labor demand has dipped more than supply, indicating that the labor market is no longer solid.
- Additionally, the Fed hinted at two more rate cuts later this year, with one expected in 2026 and another in 2027.
- Investors are also focusing on first-time unemployment claims data scheduled for release at 12:30 GMT. The prediction suggests a drop to 240,000 from the previous week’s figure of 263,000, as market anticipation grows following a recent spike in claims to a four-year high.
Technical Analysis: Pound Sterling Surpasses 20-Day EMA
The pound has dipped to around 1.3585 against the US dollar. The GBP/USD pairing will be evaluating potential breakouts from the rising triangle pattern seen on Monday. The 20-day exponential moving average is around 1.3535, indicating a bullish short-term outlook.
It’s essential to maintain a 14-day relative strength index (RSI) of 60.00 or more. If it achieves this, we could see fresh upward momentum.
On the downside, the lowest value from August 1, near 1.3140, is a critical support level. Conversely, the peak around 1.3800 in early July is a significant resistance point.
Economic Indicators
BOE Interest Rate Decision
The Bank of England (BOE) announces its interest rate decisions after eight regular meetings each year. A hawkish outlook regarding inflation usually favors the pound, while a dovish stance or rate cuts can be bearish for GBP.
Last Release: September 18, 2025, 11:00
Frequency: Irregular
Actual: 4%
Consensus: 4%
Previous: 4%
