Traders fully price in a Bank of England rate hike by November amid inflation concerns and shifting market expectations.
The GBP/USD pair remains above 1.3500, trading at 1.3535 with mild losses in early European trading. Caution ahead of UK GDP and US retail sales data tempers movement, but rising oil prices fuel inflation fears, boosting BoE rate hike expectations.
Money markets now fully price in a rate hike by the November policy meeting, with a second increase expected by April 2027. This marks a shift from earlier expectations of two rate cuts this year before geopolitical tensions escalated.
Technical analysis shows the pair pressing the upper Bollinger band, with the Relative Strength Index at 65, indicating firm bullish momentum. Support levels are seen at 1.3400 and 1.3325, while resistance lies near the May 8 high.