Key Moments
- GBP/USD fell to 1.3627 on Thursday as traders positioned ahead of the Bank of England meeting.
- Markets expect around 35 basis points of BoE cuts by year-end. One 25 bp move is fully priced, while a second is partially anticipated.
- Technical signals show a controlled correction within a broader uptrend. Key support lies in the 1.3620–1.3650 and 1.3520–1.3550 areas.
Market Focus Turns to Bank of England
GBP/USD moved lower to 1.3627 on Thursday as traders focused on today’s Bank of England meeting. Investors are watching closely for guidance on interest rate moves.
Expectations suggest UK rates will decline over the year. However, the BoE is unlikely to provide exact timing or size of cuts, as policymakers want a clearer picture of inflation trends.
Monetary Policy Expectations and US Data Delays
Global markets currently price in about 35 basis points of BoE easing by year-end. This implies one 25 bp cut is fully factored in, while a second cut has roughly a 40% probability.
Meanwhile, the US dollar faces added downward pressure due to delayed US labor market releases caused by the partial government shutdown. This postponement increases uncertainty around the Federal Reserve’s policy outlook.
| Factor | Detail |
|---|---|
| GBP/USD level | 1.3627 (Thursday) |
| BoE easing priced in | Approximately 35 basis points by year-end |
| Fully priced cut | One 25 bp reduction |
| Probability of second cut | About 40% |
UK Political Risks in the Background
Domestic political developments remain a risk. Market participants are monitoring by-elections in Gorton and Denton County on 26 February, as well as local elections in May.
Polls show growing support for the Reform UK party. According to the data, Reform UK currently leads both Prime Minister Keir Starmer’s Labour Party and Kemi Badenoch’s Conservatives, even though the next general election is not expected until 2029.
Technical Picture: Controlled Correction in GBP/USD
On the H4 chart, GBP/USD has entered a corrective phase after a strong rally in late January that reached 1.3850–1.3880. The pair rolled over from the upper Bollinger Bands and is testing support at 1.3620–1.3650. Upward momentum has eased, leaving a short-term neutral-to-bearish setup, while the broader bullish trend remains intact.
On the H1 chart, the pair trades in a descending corrective channel, forming successive lower lows near the lower Bollinger Bands. The next notable support lies at 1.3520–1.3550. For stabilization, the market must push above 1.3660–1.3700.
| Timeframe | Key Levels / Signals | Bias |
|---|---|---|
| H4 | Support 1.3620–1.3650; prior high 1.3850–1.3880; upper Bollinger rejection | Short-term neutral-to-bearish in broader uptrend |
| H1 | Descending channel; support 1.3520–1.3550; needs 1.3660–1.3700 for stability | Ongoing selling pressure |
Outlook: Bank of England Tone in the Spotlight
GBP/USD is undergoing a tactical pullback ahead of the BoE decision. Delayed US economic data is also squeezing the dollar. The correction remains orderly and tests key support within a larger bullish trend.
Near-term moves depend on BoE signals. Dovish guidance could push GBP/USD toward 1.3520. Neutral or hawkish communication could support a recovery attempt. Political uncertainty adds medium-term risk, but traders currently focus on monetary policy and defending 1.3620 support.
By RoboForex Analytical Department
Disclaimer:
Any forecasts reflect the author’s opinion. This analysis does not constitute trading advice. RoboForex is not responsible for results from trades based on this content.
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