The GBP/USD currency pair has attracted buyers and maintains a position above the 1.3300 level during the Asian trading session on Tuesday. This stability follows a previous day characterized by a lack of decisive price movement. The currency pair’s recent gains can be attributed to dovish expectations surrounding the Federal Reserve (Fed), which continue to undermine the value of the US Dollar.
Despite this upward momentum, the British Pound faces headwinds from market speculation about a potential interest rate cut by the Bank of England (BoE) later this month. Traders are exercising caution, opting to wait for the Fed’s upcoming policy decision, scheduled for Wednesday. The Fed is widely expected to lower borrowing costs, which has contributed to a dampened recovery in the US Dollar after it hit its lowest level since late October last week.
The dovish outlook for the Fed is seen as a supportive factor for the GBP/USD pair, as it alleviates some pressure on the British currency. Notably, the Organisation for Economic Co-operation and Development (OECD) recently revised its growth forecast for the UK, indicating that the BoE may conclude its easing cycle in the second quarter of 2026. This assessment provides additional support for the Pound.
While there are bullish signs for the GBP, traders remain hesitant to make aggressive bets, particularly in light of rising expectations that the BoE will also reduce interest rates. These predictions were bolstered by recent data showing that the UK’s headline Consumer Price Index (CPI) decreased to a 3.6% year-over-year rate in October, following a consistent rate of 3.8% for three consecutive months.
Traders are now looking ahead to key economic data from the US, including the ADP Weekly Employment Change and JOLTS Job Openings, which are expected to provide further direction for the currency pair later in the North American session.
In summary, while the GBP/USD pair is holding steady above 1.3300, market participants are cautious as they await critical central bank announcements and economic indicators that may influence future movements. The interplay of Fed and BoE policies will likely continue to shape the landscape for the British Pound in the coming days.