• GBP/USD initially dipped but later recovered some ground as investors digested UK inflation data and awaited the Bank of England’s interest rate decision.
• British inflation fell more sharply than expected to 3.2% in November from 3.6% in October, marking its lowest level since March and boosting expectations of a Bank of England rate cut on Thursday..
• The surprise decline, driven by lower food prices and Black Friday discounting, pushed sterling lower and raised the likelihood of additional rate cuts in 2026..
• Markets are pricing in a more than 90% probability that the Bank of England will cut interest rates by 25 basis points to 3.75% on Thursday..
• Last month, the Bank of England’s Monetary Policy Committee voted 5–4 to keep interest rates unchanged, and economists now expect any December rate cut to pass by a similarly narrow 5–4 margin.
• Among the members who opposed a cut last month, Governor Andrew Bailey appears the most likely to switch his vote.
• Immediate resistance is located at 1.3424(38.2%fib), any close above will push the pair towards 1.3515(23.6%fib)
• Strong support is seen at 1.3350(50%fib) and break below could take the pair towards 1.3275(61.8%fib).
Recommendation: Good to buy around 1.3370, with stop loss of 1.3300 and target price of 1.3450.
