- Bank of England’s 7-2 vote suggests GBP/USD may decline.
- UK inflation nearly doubles the target. Bailey hints at future cuts, though timing is uncertain.
- Unemployment stands at 231K, but Powell points to immigration as a labor challenge.
The British Pound (GBP) reversed its trajectory, gaining over 0.51% on Thursday after the Bank of England (BOE) chose to maintain its current stance, coinciding with the Federal Reserve’s easing approach for 2025. The GBP/USD was at 1.3551 after reaching a day’s high of 1.3660.
Unlike the pound’s drop after BoE holds rates at 4%, the Fed’s easing continues
Both the US and UK had busy economic reports. The US unemployment claims for the week ending September 13th were at 231K, which was below the anticipated 240K, and an increase from the previous week’s 264K. Ongoing claims fluctuated between 1.939 billion and 1.91 billion.
The data painted a positive picture, yet hiring has slowed, largely due to economists criticizing tariffs. Federal Reserve Chair Jerome Powell indicated that a shortage of immigration is adding pressure to the labor market.
The BOE opted to keep its rate steady at 4% with a vote split of 7-2, while reducing its quantitative tightening (QT) from £100 billion to £70 billion. At its last meeting, the BOE had decreased interest rates, even as UK inflation approached double its 2% target.
Governor Andrew Bailey mentioned more rate cuts are on the horizon, although the specifics of timing and scale remain vague.
Upcoming reports include retail sales data for the UK. Meanwhile, the calendar looks empty for the US, but traders should note that the Fed’s communication blackout has lifted and some news might come through.
GBP/USD price forecast: Mild bearish signals as evening stars develop
GBP/USD has shifted from a bullish trend to a period of consolidation within the 1.3500-1.3650 range, marked by the emergence of “evening stars.” For bears to exert downward pressure on the currency pair, they will first have to break below the 20-day SMA at 1.3521, and then navigate below the swing low of 1.3491 from September 11. If that happens, focus will shift to the 100 and 50-day SMA confluence around 1.3475/62.
If GBP/USD holds above 1.3600, it could open the door for another attempt at reaching the annual high of 1.3788.
