GBP/USD advances to approximately 1.3530 during the early hours of the Asian session on Friday. BoE’s Pill indicated that elevated rates would assist in mitigating inflationary pressures. The US jobs report for August is scheduled for release on Friday. The GBP/USD pair demonstrates resilience, approaching 1.3530 in the early hours of trading on Friday in the Asian market. The British Pound edges higher against the US Dollar following hawkish remarks from a Bank of England policymaker. Traders will pay close attention to the forthcoming release of the US employment report for August on Friday. Bank of England Chief Economist Huw Pill stated on Thursday that an increase in interest rates at this juncture would mitigate the likelihood of the central bank needing to adopt a more aggressive stance in the future to control inflation, which has escalated due to the Iran war. “Raising Bank Rate … need not be the start of a prolonged and aggressive series of increases,” Pill remarked. On Thursday, traders in interest rate futures assigned a probability of just over 15% for a 25 basis points rate hike at the upcoming meeting this month. However, this likelihood increased to more than 70% for the following meeting in November.
The US employment report for August is set to capture attention later today. This report may provide insights regarding the trajectory of US interest rates. Nonfarm Payrolls are anticipated to rise by 56,000 in August. The Unemployment Rate is projected to hold steady at 4.1% throughout the specified timeframe. “Monthly payrolls readings have been softer in recent months, but low jobless claims and a steady unemployment rate have kept Fed officials unconcerned about the labour market,” stated economist Andrew Hollenhorst. Strategists emphasise that market focus is increasingly directed toward the upcoming Bank of England meeting in early November. They note that “the November 5th meeting is priced for 18bpts and is also an Inflation Report/forecast meeting and thus should provide for a more fulsome analysis as it will also follow the government’s Autumn Statement/budget scheduled for October 28th.” They add that “UK-US yield spreads remain supportive following this week’s surge,” reinforcing the current backdrop for the Pound even as near-term policy expectations are only modestly recalibrated.
Pill’s latest speech scores 8.2 on FXS Speechtracker, modestly above the historic 7.9 average, indicating a slightly stronger-than-usual policy signal. The explicit call to raise Bank Rate to 4% and the emphasis on prompt, decisive action to head off second-round effects indicate a distinct hawkish stance, even as Pill underscores that this need not initiate a prolonged or aggressive hiking cycle. By cautioning that ‘fine-tuning’ rates in the context of energy-price volatility poses challenges and that second-round effects may now be more pronounced than during the ‘halcyon days’ of inflation targeting, Pill underscores a preference for front-loaded tightening. For GBP, the combination of a concrete rate level, a preference for early action, and resistance to extreme ‘what if’ scenarios supports expectations of a near-term hike while tempering bets on an extended series of increases.
In the daily chart, GBP/USD exhibits a mildly bullish bias as it trades above the 100-day Simple Moving Average and the lower Bollinger Band, maintaining the recent uptrend structure despite a slight pullback from recent highs. The Relative Strength Index around 52 indicates a marginally positive outlook, implying that upward momentum is solidifying rather than reversing. However, the price is currently pausing just beneath the Bollinger mid-line, suggesting potential short-term congestion. On the topside, immediate resistance emerges at the Bollinger middle band around 1.3555, with the upper Bollinger Band near 1.3660 acting as the next hurdle if buyers regain control. On the downside, initial support is observed at the lower Bollinger Band near 1.3450, closely followed by the 100-day SMA at 1.3445. A breach of this level would likely lead to a deeper correction and undermine the current constructive tone.
