Pound Holds Firm as Traders Await US CPI & BoE Tone

Key Moments

GBP/USD Stabilizes Ahead of US CPI and BoE Commentary

The GBP/USD pair is trading broadly flat around 1.3445 in the early Asian session on Tuesday, with investors largely sidelined ahead of the upcoming US Consumer Price Index (CPI) release later in the day. Market participants are also watching for remarks from Bank of England (BoE) policymaker Sarah Breeden.

Recently stronger-than-expected US Nonfarm Payrolls (NFP) data have bolstered expectations that the US Federal Reserve (Fed) may keep interest rates higher for an extended period. That backdrop is seen as a potential near-term support for the US Dollar.

Positioning in interest rate futures indicates that traders are now assigning an 84.0% probability to a Fed rate increase in December, up from 72.8% before the release of the latest US employment figures, according to the CME FedWatch tool.

US CPI in Focus as Market Gauges Fed Path

The forthcoming US CPI report is viewed as the key risk event for markets later on Tuesday. Consensus expectations point to a 0.3% month-on-month increase in headline CPI for October. Core CPI, which excludes food and energy, is projected to rise by 0.2%.

The publication will not include a year-on-year October CPI reading. The article notes that this is due to last year’s government shutdown, which prevented the Bureau of Labor Statistics (BLS) from gathering some data and compiling a complete index level.

BoE Policy Backdrop and Market Expectations

Last week, the BoE increased its benchmark interest rate by 25 basis points to 4.00%, the first such hike in more than three years. BoE Governor Andrew Bailey highlighted the impact of the war in the Middle East on energy prices as a key factor in shaping future policy decisions. Market pricing currently reflects expectations for three additional rate hikes by the end of next year, which the article notes is more than most economists anticipate.

BoE Governor Andrew Bailey has also underscored that upside inflation risks remain a concern, reinforcing market sensitivity to incoming data and official commentary.

UK Rates Market: Stable Start as Investors Await Data and Bailey

Strategists at Societe Generale report that the UK rates market has opened on a steady note, writing that the “10y IRS opens unchanged at 4.70% after holding 4.69% (100dma) last week.” They identify “support 4.58%, resistance 4.78%,” outlining the immediate technical corridor for the 10-year interest rate swap as participants look for further policy cues.

The bank notes that Governor Bailey “speaks in Zurich later today, first intervention since the MPC rate increase week,” an event that could influence expectations around how the BoE will react to evolving economic and inflation trends.

On the domestic data side, Societe Generale highlights that “prel 3Q GDP on Thursday” will be a key focus, with its “SG forecast 0.7% qoq.” At the global level, the bank describes a busy agenda in the “week ahead,” citing “US CPI, PPI, Fed speak incl Waller and Williams. EU 3Q GDP second read. UK prel 3Q GDP. China trade balance. CPI for Mexico, Norway, Czech Republic, Hungary, India,” underlining the volume of releases that could sway global rates and foreign exchange markets.

BoE’s Pill Signals Greater Uncertainty and Opens Door to Future Cuts

The article notes a marked shift in tone from BoE Chief Economist Huw Pill. His latest comments are assessed with a 4.2/10 score on the FXS Speechtracker, well below the historical baseline of 6.4/10, pointing to a softer, less forceful communication stance.

By stating that “nothing is baked in” for next year and that there is “no preset upward path” for rates from spring, Pill’s remarks are characterized as more dovish relative to prior guidance that more strongly emphasized maintaining restrictive policy. The explicit recognition that Bank Rate could remain unchanged or even be reduced if growth weakens, and that corporate margin compression will be a key factor, reinforces a more data-driven and growth-sensitive approach.

For the British Pound, this greater uncertainty around the policy outlook and the expressed openness to cuts are portrayed as tilting risks toward a softer path. Markets are thereby encouraged to reassess the likelihood of a prolonged tightening stance and to pay more attention to downside growth scenarios.

Technical Picture: GBP/USD Retains Constructive Bias Above 100-Day SMA

From a technical standpoint, GBP/USD continues to show a modestly bullish configuration on the daily chart. Spot remains above the 100-day simple moving average (SMA) and the middle line of the Bollinger Bands, suggesting that buyers are still stepping in on shallow dips. The Relative Strength Index (RSI) stands near 57, staying in positive territory and signaling that upside momentum remains supportive as price consolidates just below the upper Bollinger Band.

On the upside, the immediate resistance area is seen around the upper Bollinger Band, close to 1.3500. A decisive move through that level would be interpreted as opening scope for a stronger advance. On the downside, the 100-day SMA around 1.3400 offers initial support, followed by the Bollinger midpoint near 1.3370. The lower band at approximately 1.3238 is described as a deeper support zone in the event that the current bullish structure unwinds.