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Pound holds below 1.3400 as BoE hike bets track oil shock
GBP/USD stays just under 1.3400 as crude’s surge lifts Bank of England tightening expectations, while UK service inflation remains at 3.7% and services PMI stays below 50.
GBP/USD traded just below 1.3400 on Wednesday, rising about 0.25% but remaining capped near the 200-day Exponential Moving Average that has repelled advances since the pair rebounded from mid-June losses, according to FXStreet.
FXStreet said the Pound’s bid is being driven less by domestic factors and more by fresh U.S. actions tied to Iran, which pushed crude oil up more than 6% and supported firmer Bank of England tightening expectations. Markets now price a 25-basis-point hike by year-end, up from roughly three-quarters of the odds before U.S. President Donald Trump declared a ceasefire over in the storyline.
The outlook is also being shaped by mixed UK data that FXStreet linked to what it called a “trap” for Sterling. Services inflation sits at 3.7%, Services PMI remains below the 50 threshold, payroll counts are shrinking, and pay growth is cooling toward 3.4%, which the piece said makes it hard for the central bank to tighten without weighing on currency support.
On the policy front, FXStreet noted that the June hold at 3.75% included two dissenters voting for 4.00%, and that the BoE governor ruled out near-term cuts while acknowledging the path to the 2% target arrives later than expected. The report pointed to Wednesday’s FOMC minutes showing an almost evenly split committee, with many members seeing the funds rate above the current range by year-end while others were at or below it, leaving little immediate impact on GBP/USD.
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Latest closeWTI crude $81.23 ▼1.7%|GBP/USD 1.329 ▼0.5%