Despite robust US jobs figures, British Pound edges higher above 1.3350

• Near 1.3370, GBP/USD trades modestly higher in early Asian dealing on Monday.
• Three further BoE rate increases are priced into markets.
• October’s US NFP rise of 165,000 comfortably exceeded expectations.

A more hawkish-than-expected stance from the Bank of England (BoE) supports the British Pound (GBP) against the US Dollar (USD). GBP/USD advances towards 1.3370 in Monday’s early Asian session, ending a two-day run of losses.

A 25 basis point (bps) increase last week took the BoE’s benchmark interest rate to 4.00%, its first rise in more than three years. Governor Andrew Bailey highlighted the Middle East war and its upward pressure on energy prices as the main consideration for future rate decisions. By the end of next year, markets anticipate three further increases, exceeding the expectations of most economists.

Although oil prices fell as markets responded to the US midterms, Bailey said this would not have altered the decision taken today. He acknowledged, however, that it "obviously" affects his outlook.

The USD’s decline could, however, be contained by a US Nonfarm Payrolls (NFP) report that exceeded expectations. Figures released on Friday by the US Bureau of Labor Statistics (BLS) showed that 165,000 jobs were created in October, up from 60,000 in September and above the market forecast of 65,000. The Unemployment Rate also declined, moving from 4.2% in September to 4.1% in October.

According to the CME FedWatch tool, markets now assign a probability of nearly 79.6% to a Fed rate increase in December, up from 72.8% ahead of the US employment release.

BoE raises rates into line with Fed as MPC highlights inflation risks into 2027

ABN Amro analysts describe the BoE’s latest move as a further step in its monetary tightening, observing that it "raised the bank rate by 25 bps to 4.00%, matching the upper bound of the 3.75-4.00% Fed Funds Rate range." Support for the decision was broad: "eight members" favoured the rise, whereas "one preferred a 50-bps increase," a split the analysts see as evidence of a continuing hawkish bias on the MPC. On the outlook, ABN Amro stresses that the committee "projected inflation to reach around 5% by mid-2027 and signalled another increase unless the Middle East conflict is resolved," indicating that persistent geopolitical risks remain central to the BoE’s policy assessment.

BoE’s Pill signals flexibility over 2026 interest rates

At 4.2/10, the FXS Speechtracker score is substantially below Pill’s historical baseline of 6.4/10, pointing to a markedly more dovish tone and greater uncertainty. The speech retreats clearly from a tightening bias in favour of data-dependent decisions: it stresses that next year’s interest rates are not predetermined and that there is no fixed upward trajectory from spring onwards.

Further evidence of this caution comes from the suggestion that Bank Rate could remain unchanged or even decline if growth stalls, with pressure on company margins and businesses’ responses providing the key determinant. For GBP, greater uncertainty, alongside an explicit willingness to cut rates should growth weaken, is modestly negative. It implies less support for sterling than Pill’s customary stance.

Technical Analysis: GBP/USD retains bearish bias below 100-day SMA

Trading just below the 100-day simple moving average (SMA), GBP/USD faces a ceiling on the daily chart. The price remains slightly above the middle band of the 20-day Bollinger Bands, indicating underlying demand nearby, although the closely positioned 100-day SMA limits upside scope. A broadly neutral Relative Strength Index (RSI) reading of 51.1 suggests momentum is not yet sufficient to test the existing resistance structure.

The middle band of the 20-day Bollinger Bands offers the first downside support near 1.3355. Should selling intensify, the lower band around 1.3225 provides a further cushion. Initial resistance stands at 1.3395, the level of the 100-day SMA, ahead of the upper band of the 20-day Bollinger Bands near 1.3485. A move back above that higher barrier would be needed to establish a more positive bullish bias in the near term.

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