GBP Holds Near 1.35 as BoE and US CPI Data Loom

Key Moments:

GBP/USD Steady Ahead of Key Policy and Data Releases

The GBP/USD pair is struggling to extend a modest advance seen during Asian trading toward the 1.3500 area, although it remains above the 100-day Simple Moving Average (SMA). The pair is currently changing hands near the 1.3475-1.3480 band, effectively flat on the session, as market participants await fresh direction from the Bank of England (BoE) policy announcement and upcoming US inflation figures.

BoE Policy Outlook and Implications for Sterling

The BoE is due to announce its latest policy decision later today and is widely expected to leave interest rates unchanged. Even so, current market pricing signals a greater likelihood of two rate increases in 2026, reflecting perceived inflation risks linked to war-driven spikes in energy costs. As a result, investors are focused on the policy statement and subsequent press conference, where remarks by BoE Governor Andrew Bailey will be closely examined for guidance on the future path of rates. The central bank’s tone and forward guidance are expected to be key drivers of the British Pound.

US PCE, Fed Stance, and Geopolitics Support the Dollar

Traders are also looking to the US Personal Consumption Expenditures (PCE) Price Index, scheduled for release later today, for additional impetus for GBP/USD. In the interim, the US Dollar continues to draw support from the Federal Reserve’s hawkish tilt and persistent geopolitical tensions between the United States and Iran, limiting the upside for the currency pair.

The Fed left interest rates unchanged on Wednesday, but the decision produced the largest number of dissents since 1992, with three policymakers opposing the accommodative language in the statement. Following the meeting, market participants quickly scaled back expectations for further easing by the Fed in 2026 and are now assigning more than a 10% probability to a rate hike by year-end.

On the geopolitical front, US President Donald Trump rejected a new proposal from Iran aimed at ending the two-month conflict, restating that there will be no peace agreement with the Islamic Republic unless it abandons its nuclear program. Trump also said that the naval blockade of Iranian ports will remain in place, keeping geopolitical risks elevated. These developments are seen as supportive for the US Dollar and are likely to restrain gains in GBP/USD.

Event Focus: BoE Governor Andrew Bailey’s Upcoming Speech

The following data describe the upcoming appearance by BoE Governor Andrew Bailey:

Andrew Bailey is the Bank of England’s Governor. He took office on March 16th, 2020, at the end of Mark Carney’s term. Bailey was serving as the Chief Executive of the Financial Conduct Authority before being designated. This British central banker was also the Deputy Governor of the Bank of England from April 2013 to July 2016 and the Chief Cashier of the Bank of England from January 2004 until April 2011.