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British Pound catches bid as BoE hawk warns inflation is embedded

  • GBP/USD gains 0.40% as the US Dollar retreats from multi-month highs.
  • Mann says UK inflation has become increasingly embedded.
  • Markets price in 87% odds of a November BoE rate hike.

The Pound Sterling (GBP) advances about 0.40% on Tuesday as the Greenback retreats from multi-month highs, boosted by hawkish comments from a Bank of England (BoE) Monetary Policy Committee (MPC) member, while a widening US trade deficit weighed on the Greenback. The GBP/USD trades at 1.3281 at the time of writing.

Sterling advances as Dollar retreats, while markets boost November BoE hike bets

An improvement in risk appetite is hurting the US Dollar, which, according to the US Dollar Index (DXY), which measures its performance against six currencies, is down 0.31% at 101.78.

In the Middle East, hostilities continued, as Yemeni forces and the Houthis exchanged fire as the former try to recapture Bab al-Mandab strait to reopen vessel traffic in the Red Sea. This pushed energy prices lower, with West Texas Intermediate (WTI), the US Oil benchmark, down 0.59% at $88.75 per barrel.

On the data front, the US trade deficit widened in August, as imports rose to a record high, resulting in record goods trade deficits with at least three countries, including Mexico. The figure came at $-105.6 billion, missing the forecast of $-102 billion.

Other data showed the labor market is solid, with the ADP Employment Change 4-week average rising to 23.75K, up from 22.5K the previous week.

In the UK, the schedule was light, with BoE’s Catherine Mann stating that inflation has become embedded. Her comments boosted the Pound, and now traders' eyes are on the BoE’s Governor Andrew Bailey, expected to speak on Thursday.

Money markets had priced in an 87% chance of a rate hike in November, according to Prime Terminal, mostly due to the prolongation of the Middle East conflict, which has elevated energy prices.

BoE interest rate probabilities - Source: Prime Terminal

GBP/USD Price Forecast: Technical Outlook

Chart Analysis GBP/USD
GBP/USD daily chart

In the daily chart, GBP/USD trades at 1.3276, keeping a bearish near-term bias as spot holds beneath the dense cluster of the 50, 100 and 200-day Simple Moving Averages (SMAs) grouped around 1.3451. Price also remains below the latest downward-sloping resistance trend lines, with nearby supply first at the earlier break level of 1.3304 and then at 1.3428, reinforcing a capped tone despite the Relative Strength Index (RSI) at 41.6 hinting at only modestly negative momentum rather than outright oversold conditions.

On the topside, immediate resistance appears at the former break of the primary descending trend line near 1.3304, followed by the secondary downward resistance around 1.3428 and the broader SMA barrier clustered close to 1.3451. On the downside, initial support is derived from the rising trend structure, with the more recent upward-support line anchored near 1.3159 and the deeper medium-term base around 1.3140, where buyers would be expected to re-emerge if the current 1.3276 pivot gives way.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Pound Sterling Price Today

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Japanese Yen.

USDEURGBPJPYCADAUDNZDCHF
USD-0.34%-0.36%0.16%-0.28%-0.17%-0.42%-0.01%
EUR0.34%-0.07%0.50%0.04%0.19%-0.09%0.34%
GBP0.36%0.07%0.57%0.13%0.25%-0.03%0.42%
JPY-0.16%-0.50%-0.57%-0.43%-0.31%-0.56%-0.13%
CAD0.28%-0.04%-0.13%0.43%0.12%-0.15%0.29%
AUD0.17%-0.19%-0.25%0.31%-0.12%-0.28%0.18%
NZD0.42%0.09%0.03%0.56%0.15%0.28%0.46%
CHF0.00%-0.34%-0.42%0.13%-0.29%-0.18%-0.46%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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