GBP/USD consolidates above mid-1.3300s as traders await BoE and US CPI report

GBP/USD lacks any firm intraday direction as traders opt to wait for the BoE policy decision.
A soft UK CPI print and a rise in the Unemployment Rate back the case for a rate cut.
Dovish Fed expectations keep a lid on the attempted USD recovery, supporting spot prices.

Haresh Menghani FXStreet

The GBP/USD pair struggles to capitalize on the overnight bounce from the 1.3310 area, or a one-week low, and oscillates in a narrow band during the Asian session on Thursday. Spot prices currently trade around the 1.3370 region, down less than 0.10% for the day, as traders opt to wait on the sidelines ahead of the key central bank event risk and US consumer inflation data.

The Bank of England (BoE) is scheduled to announce its policy decision later today and is widely expected to lower interest rates by 25 basis points (bps), following a pause in November. The bets were reaffirmed by softer UK consumer inflation figures on Tuesday, which continue to undermine the British Pound (GBP) and turn out to be a key factor acting as a headwind for the GBP/USD pair.

The UK Office for National Statistics (ONS) reported that the headline Consumer Price Index (CPI) rose 3.2% over the year in November, marking a notable slowdown from 3.6% in October and missing expectations for a reading of 3.5%. Moreover, the gauge excluding volatile food and energy items – core CPI – climbed 3.2% YoY last month, compared to consensus estimates and October's 3.4% print.

This comes on top of a rise in Britain’s unemployment rate to its highest since the start of 2021 and provides the BoE headroom to ease monetary policy further. The GBP bears, however, seem reluctant to place aggressive bets and opt to wait for more cues about the BoE's policy path before placing fresh bets. Apart from this, the lack of follow-through US Dollar (USD) buying supports the GBP/USD pair.

Despite the US Federal Reserve's (Fed) cautious outlook, traders have been pricing in the possibility of two more rate cuts in 2026 amid visible signs of a softening US labor market. Moreover, expectations for a dovish replacement of Fed Chair fail to assist the USD in capitalizing on the overnight recovery. This, in turn, warrants caution before positioning for deeper losses for the GBP/USD pair.

Economic Indicator

BoE Interest Rate Decision

The Bank of England (BoE) announces its interest rate decision at the end of its eight scheduled meetings per year. If the BoE is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Pound Sterling (GBP). Likewise, if the BoE adopts a dovish view on the UK economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for GBP.

GBP/USD flies to two-week highs, targets 1.3400

GBP/USD trades well above the 1.3300 barrier on Thursday as the Greenback comes under renewed selling pressure following a softer-than-expected US NFP report in June. Meanwhile, Cable extends its multi-day recovery and looks to challenge 1.3400 sooner rather than later.

EUR/USD: Signs of life emerge above 1.1400

EUR/USD leaves behind two daily pullbacks in a row and advances to multi-day peaks near 1.1470 on Thursday, partially offsetting the sharp decline in place since June. The pair’s decline follows the intense retracement in the US Dollar, which is particularly sponsored by disheartening prints from June’s Payrolls and the sharp sell-off in USD/JPY. The US markets will be closed on Friday due to the Independence Day holiday.

Gold gains momentum above $4,100 after weak US NFP data

Gold price gains traction to around $4,125 during the early Asian session on Friday. The precious metal extends the rally after weaker-than-expected US Nonfarm Payrolls ‌(NFP) data reduced expectations of Federal Reserve interest rate hikes this year.

Strategy's STRC volatility points to late Bitcoin cycle reset — Bitwise

The recent volatility surrounding Strategy's perpetual preferred stock, STRC, could signal that Bitcoin (BTC) is approaching a cycle bottom, according to Bitwise CIO Matt Hougan. In a Wednesday report, Hougan argued that the sharp decline in STRC and Strategy's MSTR stock should be viewed as "classic end-of-cycle dynamics" rather than evidence of a broader structural threat to Bitcoin.

The market may no longer be giving the Magnificent Seven a free pass

For much of the past three years, investing has felt surprisingly simple. Whenever markets stumbled, investors knew where to look. Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta and Tesla repeatedly led Wall Street higher, shrugging off inflation fears, higher interest rates and geopolitical shocks.

Kevin Warsh offers no policy clues: Why markets still got their answer

Financial markets came to Sintra looking for clues about the Federal Reserve's (Fed) next move. They largely left with confirmation that Fed Chair Kevin Warsh intends to make those clues much harder to find.