GBP/USD declines to approximately 1.3610 during the early Asian session on Monday. The BoE emphasized that the policy will continue on a “gradual downward path,” impacting the Pound Sterling negatively. The postponed publication of the US employment report for January will attract significant attention on Wednesday. The GBP/USD pair declines to approximately 1.3610 in the early Asian session on Monday. The Pound Sterling is weakening against the Greenback as expectations rise regarding a potential interest-rate cut by the Bank of England. Market participants will seek additional insights later on Monday.
The Bank of England maintained interest rates at 3.75% during its initial meeting of 2026 last week. The UK central bank indicated a significant likelihood of an interest-rate cut in the near future, emphasizing that monetary policy is being calibrated to guarantee that the inflation rate “not only reaches 2% but remains sustainably at that level in the medium term.”
“We maintain our expectation for the next rate cut to occur in March. After that, we think the BOE will deliver a prolonged pause before resuming policy normalization in early 2027 (we see a terminal rate of 3.00% by mid-2027),” stated Dani Stoilova. Speculation surrounding the potential resignation of UK Prime Minister Keir Starmer on Monday may exert downward pressure on the Cable relative to the US Dollar. Pressure on Starmer has escalated in light of the Mandelson–Epstein fallout and increasing dissatisfaction within the party. Starmer is anticipated to engage with Members of Parliament during the Parliamentary Labour Party meeting on Monday, with additional interactions with party caucuses also expected.
Market participants prepare for the postponed publication of the US employment report for January, anticipated to provide new momentum, scheduled for release on Wednesday. The US economy is projected to add 70,000 jobs in January, with the Unemployment Rate expected to hold steady at 4.4% during this timeframe. If the report indicates outcomes that are weaker than anticipated, this may lead to a decline in the USD and limit the downside potential for the major pair.