The Pound Sterling (GBP) plummets against its major peers in Thursday's North American session after the Bank of England (BoE) monetary policy meeting in which the central bank reduced interest rates by 25 basis points (bps) to 4.5%. This is the third interest rate cut by the BoE in its current policy-easing cycle, which started at the August 2024 policy meeting and the central bank was widely anticipated to do the same.
Investors anticipated the 25-bps interest rate decision, with an 8-1 vote split. However, the monetary policy report showed that all policymakers agreed to further policy easing, and two of them (Swati Dhingra and Catherine Mann) favored a larger-than-usual 50-bps interest rate reduction. It was surprising for market participants to see policymaker Catherine Mann, an outspoken hawk, supporting a bigger rate cut move.
BoE Governor Andrew Bailey has guided a cautious and gradual rate-cut approach amid projections that inflation could temporarily accelerate to 3.7% in the third quarter of the year due to higher energy prices before falling back again to the 2% target. The BoE has also revised its Gross Domestic Product (GDP) growth forecasts for this year to 0.75%, lower than the 1.5% economic expansion projected in November.
A weak economic outlook has forced market participants to raise dovish bets for the remaining year. Traders are pricing in three more cuts this year against 56-bps interest rate reduction discounted before the policy announcement.
The table below shows the percentage change of the British Pound (GBP) against listed major currencies today. The British Pound was the strongest against the New Zealand Dollar.
USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | 0.30% | 0.72% | -0.50% | 0.15% | 0.28% | 0.47% | 0.46% | |
EUR | -0.30% | 0.42% | -0.80% | -0.14% | -0.02% | 0.18% | 0.15% | |
GBP | -0.72% | -0.42% | -1.26% | -0.56% | -0.44% | -0.24% | -0.25% | |
JPY | 0.50% | 0.80% | 1.26% | 0.67% | 0.79% | 0.95% | 0.98% | |
CAD | -0.15% | 0.14% | 0.56% | -0.67% | 0.13% | 0.32% | 0.32% | |
AUD | -0.28% | 0.02% | 0.44% | -0.79% | -0.13% | 0.19% | 0.17% | |
NZD | -0.47% | -0.18% | 0.24% | -0.95% | -0.32% | -0.19% | -0.00% | |
CHF | -0.46% | -0.15% | 0.25% | -0.98% | -0.32% | -0.17% | 0.00% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
The Pound Sterling dips below the key support of 1.2400 against the US Dollar. The GBP/USD resumed its downside journey after an upside retracement move to near the 50-day Exponential Moving Average (EMA) around 1.2500
The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, suggesting a sideways trend.
Looking down, the January 13 low of 1.2100 and the October 2023 low of 1.2050 will act as key support zones for the pair. On the upside, the December 30 high of 1.2607 will act as key resistance.
Keep up with the financial markets, know what's happening and what is affecting the markets with our latest market updates. Analyze market movers, trends and build your trading strategies accordingly.