Outlook
Outlook: The pound remains rangebound ahead of a run of key UK data and guidance from the Bank of England (BoE). Markets are weighing how aggressively the BoE will cut rates versus the Federal Reserve's (Fed) easing path, a divergence that has kept GBP pairs volatile. A softer UK jobs report could push Sterling lower if the labour market slows, while firmer data may keep the currency within the current band. Current price action shows GBPUSD around 1.3628, with GBP/EUR near 1.1500 on 7-day highs and GBPJPY about 209.3.
Key drivers
Key drivers:
- BoE policy stance and inflation/wage dynamics (BoE = Bank of England) shaping rate-cut expectations.
- Fed policy divergence (Fed = U.S. Federal Reserve) and the perceived pace of easing creating volatility for GBPUSD.
- Global risk sentiment and geopolitical tensions driving flows and risk appetite.
- UK inflation and labour market momentum influencing BoE decisions.
Range
Range: GBPUSD is 1.3628, about 1.3% above its 3-month average of 1.3449, having traded in a 1.3050–1.3837 range (6.0%). GBP/EUR is near 1.1500 on 7-day highs, just above its 3-month average, with a 1.1322–1.1590 range (2.4%). GBP/JPY sits at 209.3, just below its 3-month average, in a 204.5–214.3 range (4.8%).
What could change it
What could change it:
- A softer UK jobs data print or clearer signs of wage pressure shifting BoE rate-cut expectations.
- Surprise BoE guidance or policy changes that alter the rate path.
- A more aggressive Fed easing trajectory or shifts in USD risk sentiment that shift cross-pairs.
- Escalation in geopolitical tensions or shifts in global risk appetite affecting capital flows into/away from UK assets.
