GBP/USD remains stable around 1.3275 during the early Asian session on Thursday. BoE’s Greene asserts that it is fitting to take proactive measures in tightening our monetary policy stance. Traders have increased their wagers on a 25 basis points Federal Reserve rate hike in December to 87.3%. The GBP/USD pair remains stable at approximately 1.3275 in the early hours of the Asian session on Thursday. Traders are persistently evaluating the trajectory of monetary policy from the Bank of England and the US Federal Reserve. The preliminary reading of UK Gross Domestic Product for the third quarter (Q3) is set to be released later on Thursday. BoE policymaker Megan Greene said on Wednesday that it was appropriate to “proactively tighten our monetary policy stance” to ward against the risk of wage growth getting stuck at higher levels and firms passing those costs on. Hawkish comments from Greene could provide some support to the Cable against the USD in the near term.
On the US front, traders are increasing their expectations for a Federal Reserve rate hike in December, prompted by inflation data from the Consumer Price Index that exceeded forecasts. Fed Governor Christopher Waller indicated earlier this week his support for a quarter-point rate increase in December, and he may advocate for a half-point adjustment should inflation data exceed expectations. Markets are currently reflecting an approximately 87.3% likelihood of a Federal Reserve rate increase during the December policy meeting, with the probability of a 50 basis points hike at 12.7%, as indicated by the CME FedWatch Tool. “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,” said Elias Haddad.
Strategists note that UK rates are starting the week on a stable footing, with the “10y IRS opens unchanged at 4.70% after holding 4.69% (100dma) last week.” They highlight nearby technical levels, citing “support 4.58%, resistance 4.78%,” and point out that Governor Bailey “speaks in Zurich later today, first intervention since the MPC rate increase week,” a key event for Sterling and UK rates traders. Looking ahead, Societe Generale flags a busy global data calendar, with the “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.” In the UK specifically, they focus on Thursday’s growth release, where “prel 3Q GDP” is due and SG “forecast 0.7% qoq,” providing an important gauge of domestic momentum following the recent MPC decision.
BoE’s Greene delivers a strongly hawkish signal, with a 9.4/10 FXS Speechtracker score notably above the historic 7.7/10 baseline. The emphasis on “proactively tighten our monetary policy stance” marks a clear shift toward tighter policy guidance. The assertion that UK wage growth is “too high” and that labour market slack is less significant than previously estimated strengthens the argument for prompt and more vigorous measures. This combination of persistent wage pressures and reduced slack supports a stronger Pound bias as markets price in a higher probability of additional BoE tightening. In the daily chart, GBP/USD maintains a bearish near-term bias as the spot remains below the 100-day simple moving average and the Bollinger middle band. The pair is consolidating in the lower half of the recent Bollinger envelope, with the lower band providing nearby demand.
Meanwhile, the Relative Strength Index (14) at 43 indicates subdued, mildly negative momentum rather than oversold conditions. On the topside, initial resistance is concentrated around the Bollinger middle band at 1.3370, followed by the 100-day SMA at 1.3400, with a more substantial cap forming at the Bollinger upper band near 1.3475. On the downside, immediate support is observed at the Bollinger lower band at 1.3260; a decisive break beneath this level would pave the way for a more significant decline, while sustained trading above it would maintain the pair within a range, albeit still constrained by overhead moving-average resistance.
