GBPUSD Dives Below 1.26 After the Bank of England Meeting
GBPUSD returned lower yesterday, falling 1.5 cents after the FED rate cut, which was followed by the Bank of England policy meeting today.
The GBP started the week on a bullish footing, after a number of positive reports from the UK, which were bullish for the British Pound. Yesterday we had the November CPI report, which showed a jump in consumer inflation in the UK, following an improvement in UK services PMI and labor market numbers, which sent the price from 1.26 to 1.2730s.
GBP/USD Chart Daily – Mas Continue to Rejects Bounces
However, moving averages have turned into resistance which strengthens the bearish case, and yesterday the 20 SMA (gray) rejected the price on the daily chart. Then came the hawkish FED rate cut which indicated a slower pace of monetary easing in 2025 send GBP/USD back down, breaking the 1.26 support zone and opening the door for further declines toward the November low below 1.25.
Bank of England Policy Meeting for November
- Bank Rate Decision:
- Bank rate held steady at 4.75%, in line with expectations.
- Previous rate was also 4.75%.
- Voting Outcome:
- Vote split: 6-3 in favor of holding rates steady (vs. 8-1 expected).
- Dhingra, Ramsden, and Taylor voted for a 25 bps rate cut.
- Policy Stance:
- A gradual approach to easing monetary policy remains the preferred course.
- No commitment on the timing or magnitude of rate cuts in 2025 due to high economic uncertainty.
- Inflation Dynamics:
- Services consumer price inflation remains elevated.
- Domestic inflationary pressures are easing, but at a slower pace than anticipated.
- Economic Activity:
- Most indicators of UK near-term activity show declines.
- Labour Market:
- Broadly balanced, but significant uncertainty persists, especially regarding wage growth trends.
- Monetary Policy Outlook:
- Policy will remain restrictive for a sufficiently long period to mitigate risks and ensure inflation sustainably returns to the 2% target over the medium term.
- Full statement
GBP/USD Live Chart
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