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GBP/USD edges higher as BoE seen holding rates at 3.75%

UOB strategists cite improving GBP/USD near 1.3326, with BoE action viewed as unlikely unless energy prices shock higher again.

Reported · Written up by our desk · Major Pairs

UOB strategists said GBP/USD edged up to 1.3326, even as investors weigh competing macro risks for the UK. They pointed to Gilts being pulled between fiscal concerns tied to Prime Minister Burnham’s debut plans and a separate Oil price shock.

FXStreet said UOB expects the Bank of England to keep its policy rate at 3.75%, aligning with a Bloomberg poll of seven analysts where all respondents also anticipated a hold. UOB economist Lee Sue Ann similarly expected no rate change in July.

The view hinges on the balance of risks, with FXStreet noting that upside pressure for tightening is seen as modest and dependent on renewed energy-price strength. The piece added that softer demand and a loosening labour market reduce the case for near-term action, while elevated services inflation and energy-price volatility keep tightening risks on the table.

FXStreet also reported traders are looking ahead to major central bank events later in the week, including the Fed and BoE policy announcements. The broader context in the same market commentary included GBP strength alongside a generally weaker US Dollar.

Latest closeGBP/USD 1.332 ▼0.4%

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