Rabobank forecasts limited Sterling gains as BoE hawkish rhetoric clashes with steady rates and fiscal concerns.
GBP/USD is expected to trade in a 1.32–1.33 range over the next one to three months, as UK fiscal risks and steady interest rates offset initial support from hawkish Bank of England rhetoric. The Fed’s recent policy decision weakened the USD, but doubts over its inflation-fighting stance may limit further declines.
The BoE is widely anticipated to hold rates steady this week but may adopt a hawkish tone to signal potential hikes in the coming months. Dissent within the Monetary Policy Committee is likely, though some analysts expect no policy changes this year. Market pricing of future hikes could reduce the need for immediate action.
UK fiscal concerns remain a key downside risk for Sterling, with second-order price effects adding uncertainty to the BoE’s policy outlook. The interplay between Fed credibility and BoE messaging will shape GBP/USD movements in the near term.