British Pound holds above 1.3250 ahead of UK GDP release

• At around 1.3275, GBP/USD is little changed in early Asian trading on Thursday.
• Proactive monetary policy tightening is appropriate, according to BoE policymaker Greene.
• The probability traders assign to a 25 bps Fed rate increase in December has risen to 87.3%.

The preliminary estimate of UK Gross Domestic Product (GDP) for the third quarter (Q3) is due later on Thursday, with GBP/USD trading little changed around 1.3275 in the early Asian session. Market participants remain focused on the policy outlook for both the Bank of England (BoE) and the US Federal Reserve (Fed).

To guard against wage growth becoming entrenched at elevated levels and companies passing on those costs, BoE policymaker Megan Greene said on Wednesday that it was appropriate to "proactively tighten ‌our monetary policy stance". Her hawkish remarks could lend Cable some near-term support against the USD.

Stronger-than-expected US Consumer Price Index (CPI) inflation figures have prompted traders to increase their bets on a December Fed rate rise. Earlier this week, Fed Governor Christopher Waller indicated that he would back a quarter-point increase in December, while potentially advocating a half-point rise if inflation figures prove worse than expected.

According to the CME FedWatch Tool, the probability of a Fed rate rise at the December policy meeting is now priced at nearly 87.3%. The likelihood of a 50 bps increase stands at 12.7%.

Elias Haddad, global head of markets strategy at Brown Brothers Harriman & Co., said: "We've got broad-based strength in the dollar largely underpinned by a hawkish shift in Fed fund rate expectations driven by the hot October CPI print but amplified as well by recent comments by Fed officials,"

UK rates hold steady ahead of Bailey speech and global data releases

With UK rates opening the week little changed, strategists at Societe Generale report that the "10y IRS opens unchanged at 4.70% after holding 4.69% (100dma) last week." Their assessment of nearby technical thresholds identifies "support 4.58%, resistance 4.78%," while Governor Bailey "speaks in Zurich later today, first intervention since the MPC rate increase week," making his appearance a key focus for traders in Sterling and UK rates.

A full international economic calendar lies ahead, according to Societe Generale: "week ahead: 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." For the UK, attention centres on Thursday’s growth figures, with "prel 3Q GDP" scheduled for release and SG stating "forecast 0.7% qoq," an important measure of domestic economic momentum after the latest MPC decision.

Greene backs proactive tightening amid rising UK wage risks

A 9.4/10 FXS Speechtracker reading, well above the historical baseline of 7.7/10, underlines the strongly hawkish message from BoE policymaker Greene. Her focus on the need to “proactively tighten our monetary policy stance” signals a clear move towards tighter policy guidance.

The argument for earlier and stronger action is reinforced by her assessment that UK wage growth is “too high” and that the labour market has less spare capacity than previously believed. As markets assign a greater likelihood to further BoE tightening, persistent wage pressure alongside reduced slack favours a stronger Pound.

Technical Analysis: GBP/USD Stays Under Pressure Below the 100-day SMA

Trading below both the 100-day simple moving average (SMA) and the Bollinger middle band leaves GBP/USD with a bearish short-term outlook on the daily chart. Consolidation remains confined to the lower half of the recent Bollinger envelope, where the lower band provides a nearby area of demand. At 43, the Relative Strength Index (14) points to muted, slightly negative momentum rather than oversold conditions.

The Bollinger middle band at 1.3370 marks the first area of resistance, ahead of the 100-day SMA at 1.3400. A firmer barrier lies near 1.3475 at the Bollinger upper band. Immediate support, meanwhile, comes from the Bollinger lower band at 1.3260. A clear break below that level would pave the way for a more pronounced decline; holding above it would preserve range-bound trading, though moving-average resistance overhead would continue to weigh on the pair.

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