Forex News

• GBP/JPY holds firm above 201.00 after the Bank of England keeps rates unchanged.
• The BoE leaves Bank Rate at 4% in a close 5-4 split, with four members backing a 25-bps cut.
• Governor Bailey says rates are likely to stay on a gradual downward path but remain restrictive until inflation eases further.

The British Pound (GBP) trades slightly firmer against the Japanese Yen (JPY) on Thursday after the Bank of England (BoE) decided to keep interest rates unchanged at 4%, in line with market expectations. At the time of writing, GBP/JPY is trading around 201.18, rebounding from a knee-jerk low of 200.65 seen immediately after the monetary policy announcement.

The BoE’s 5-4 vote revealed a close split within the Monetary Policy Committee (MPC), with four members favoring a 25 basis-point (bps) rate cut. Policymakers noted that inflationary pressures continue to ease, supported by slower wage growth and signs of weaker demand. Headline CPI stood at 3.8% in September, and the central bank expects inflation to fall to around 3% early next year, before returning toward the 2% target in 2027

Despite a dovish tilt, the BoE emphasized that any future rate cuts would be “gradual and data-dependent.” The central bank’s latest forecasts point to subdued Gross Domestic Product (GDP) growth through the end of the year, with household spending restrained by high borrowing costs and an elevated saving ratio. According to the BoE’s November Monetary Policy Report, market pricing now implies the Bank Rate will decline to around 3.5% in the second half of 2026.

Speaking at the post-meeting press conference, BoE Governor Andrew Bailey said the central bank is likely to remain on a “gradual downward path” for interest rates, reaffirming that policy will stay restrictive for some time to ensure inflation returns sustainably to target. Bailey noted that economic activity remains below potential and the labor market is clearly slowing, with firms hiring less and employment subdued.

He cautioned, however, that inflation could remain sticky, emphasizing that policymakers need to see the downward path in price pressure become more established before considering further rate cuts. Bailey added that the Committee reassesses how restrictive policy is at each meeting, with no fixed view on the neutral rate.

The policy contrast between the Bank of England and the Bank of Japan (BoJ) remains a key driver for the pair. While the BoE signaled that interest rates are likely to move lower gradually through 2026 as inflation slows, the BoJ kept its policy rate unchanged at 0.50% last week but hinted that further tightening could be considered if inflation and wage growth strengthen. This policy gap continues to support the Pound’s relative resilience against the Yen in the near term.

(This story was corrected on November 6 at 13:36 GMT to fix the date in the first paragraph. It's Thursday, not Wednesday.)

Bank of England Governor Andrew Bailey speaks on the policy outlook and responds to questions from the press after leaving the policy rate unchanged at 4% at the November meeting.

BoE press conference key quotes

"We need to see downward path of inflation become more established before we cut rates again."

"We are likely to continue to be on a gradual downward path for rates."

"Provided there is no repeat of past rises in administered prices, this should shave another half percentage point off services price inflation in H2 2026."

"We expect pass-through of non-wage labour costs including NICS rise to limit decline in services price inflation in next few months."

"We have to remain careful that higher food and energy prices do not lead to 2nd-round effects on wage- and price-setting."

"It is encouraging that inflation peak in sept was 0.2 percentage points below our August forecast."

"Latest data point on inflation was encouraging but only one data point."

"BoE's next asset purchase facility will include new measure that paints a somewhat different picture of Qt costs."

"Our approach is to transition to a system where reserves are primarily supplied via repos."

"We are at quite an important moment here for UK data."

"Market curve does give a reasonable view of a sensible path for rates."

""Some MPC members, including me, do not have a confident view on an equilibrium terminal rate."

This section below was published at 12:00 GMT to cover the Bank of England's (BoE) monetary policy announcements and the initial market reaction.

The Bank of England announced on Thursday that it left the policy rate unchanged at 4% following the November policy meeting, as anticipated.

Four members of the BoE's Monetary Policy Committee (MPC), Breeden, Dhingra, Ramsden and Taylor, voted in favor of reducing the policy rate by 25 basis points (bps).

Key takeaways from the BoE policy statement

"We still think rates are on a gradual path downwards but need to be sure CPI on track for 2% before cutting again."

"Overall risks to inflation are more balanced, value in waiting for further evidence this year."

"CPI judged to have peaked at 3.8% in Sept, falls below target in Q2 2027."

"Risk from greater inflation persistence less pronounced, risk from weaker demand more apparent."

"UK economic activity is below potential, job vacancies have fallen and employment growth has stalled."

"More evidence needed to be sure CPI is on track to return to 2%."

"CPI could remain persistently high if administered prices rise again, cost pressures stay strong or firms raise profit margins."

"Forecast shows CPI in one year's time at 2.5% (August forecast: 2.7%), based on market interest rates."

"Forecast shows CPI in three years' time at 2.1% (August forecast: 2.0%), based on market interest rates."

"Forecast shows CPı in two years' time at 2.0% (August forecast: 2.0%), based on market interest rates."

"BoE estimates GDP +0.2% QQ in Q3 2025 (September forecast: "Around 0.4%"), sees +0.3% QQ in Q4 2025."

"Market rates imply similar loosening to August, show bank rate at 3.9% in Q4 2025, 3.5% in Q4 2026, 3.5% in Q4 2027, 3.6% in Q4 2028 (August: 3.8% in Q4 2025, 3.5% in Q4 2026 and 3.6% Q4 2027)."

"Forecasts show GDP growth in 2025 1.5% (August forecast: 1.25%), 2026 1.2% (August: 1.25%), 2027 1.6% (August 1.5%), 2028 1.8%, based on market rates."

"BoE estimates private-sector regular wage growth in Q4 2025 3.5% YY (August forecast: 3.75%); Q4 2026 3.2% (August forecast: 3.25%); Q4 2027 2.9% (August: 3%); Q4 2028 3.2%."

"BoE forecasts unemployment rate 5.0% in Q4 2025 (August forecast: 4.9%); Q4 2026 5.0% (August forecast: 4.9%); Q4 2027 4.9% (August forecast: 4.8%), Q4 2028 4.7%."

"Restrictiveness of monetary policy has fallen as bank rate has been reduced."

"If progress on disinflation continues bank rate is likely to continue on a gradual downward path."

Market reaction to BoE policy announcements

GBP/USD retreated slightly from session highs with the immediate reaction to the BoE's monetary policy announcements and was last seen trading at 1.3070, rising 0.12% on the day.

This section below was published as a preview of the Bank of England's (BoE) interest rate decision at 06:00 GMT.

• The Bank of England is expected to keep its policy rate at 4%.
• UK inflation figures remain well above the BoE’s target.
• GBP/USD continues to trade at the lower end of its range, just over 1.3000.

The Bank of England (BoE) will announce its latest policy decision on Thursday, marking its seventh rate meeting of 2025.

Most analysts expect the ‘Old Lady’ to hold fire and keep the base rate at 4%, following the cut delivered back on August 7. Once the announcement lands, the bank will publish the meeting Minutes, offering a closer look at the debate behind the decision.

The market’s base case is for no change, but a 25-basis-point cut isn’t completely off the table. With the UK economy looking increasingly fragile and the fiscal picture continuing to worsen, there’s still a case for the BoE to ease a little further.

Cooling inflation and fiscal woes

The Bank of England kept interest rates on hold at 4% in September, after the Monetary Policy Committee voted 7–2 to stay put. Members Swati Dhingra and Adam Taylor backed a 25-basis-point cut, following the quarter-point reduction delivered in August.

In its latest statement, the BoE stuck to its forecast that inflation will peak around 4% this month before gradually easing back to the 2% target by mid-2027. On growth, the bank staff expect GDP to rise 0.4% in the July-to-September quarter, hardly booming, but still avoiding contraction.

Fresh data from the Office for National Statistics showed headline CPI inflation rising to 3.8% in September, while core inflation (excluding food and energy) eased slightly to 3.5%. Services inflation, often watched closely by the BoE, stayed stubborn at 4.7%, suggesting that underlying price pressures haven’t fully cooled.

Meanwhile, the fiscal picture remains challenging. Chancellor Rachel Reeves warned on Tuesday that broad tax rises could be coming, as she seeks to avoid a return to austerity. She described her upcoming second annual budget as one built on “hard choices”, protecting public services while keeping Britain’s debt in check.

With the budget just three weeks away, Reeves painted a bleak backdrop: pandemic-era debt, weak productivity, and sticky inflation. Her comments hinted she might even break Labour’s election pledge not to raise major taxes: a politically risky move, but one aimed at reassuring investors that the government intends to keep borrowing under control.

In the meantime, recent remarks from BoE policymakers struck a more cautious tone:

• MPC member Megan Greene said a couple of weeks ago that she didn’t see a strong case for the bank to keep cutting rates at the current quarterly pace, though she also noted the easing cycle isn’t finished yet.
• Governor Andrew Bailey, for his part, pointed to the October labour market data as evidence that underlying inflation pressures are continuing to cool. He also flagged that ongoing tariff uncertainty is weighing on business investment decisions, though, for now, it doesn’t seem to be filtering through to prices.

How will the BoE interest rate decision impact GBP/USD?

Investors expect the BoE to retain its reference rate at 4% on Thursday at 12:00 GMT.

While the outcome seems to be fully priced in, attention will focus on the vote split among MPC members, which might be a market mover for the British Pound if it indicates an atypical vote.

In the run-up to the meeting, GBP/USD appears to have met decent contention near the psychological 1.3000 threshold for now.

"Cable came under some strong and persistent downside pressure after hitting monthly tops near 1.3730 on September 17," said Pablo Piovano, senior analyst at FXStreet. He notes that a decisive break below 1.3000 could see the pair slip back to the April valley at 1.2707 (April 7).

On the upside, Piovano identified the key 200-day Simple Moving Average (SMA) at 1.3254 as an important hurdle, ahead of minor resistance levels at the weekly top at 1.3471 (October 17) and the October ceiling at 1.3527 (October 1).

Meanwhile, a technical bounce should not be discarded in the short-term horizon, as the Relative Strength Index (RSI) places a spot in the oversold region at around 24, Piovano concludes.

Bank of England Governor Andrew Bailey speaks on the policy outlook and responds to questions from the press after leaving the policy rate unchanged at 4% at the November meeting.

Key quotes

"Latest data point on inflation was encouraging but only one data point."

"BoE's next asset purchase facility will include new measure that paints a somewhat different picture of Qt costs."

"Our approach is to transition to a system where reserves are primarily supplied via repos."

"We are at quite an important moment here for UK data."

"Market curve does give a reasonable view of a sensible path for rates."

"Some MPC members, including me, do not have a confident view on an equilibrium terminal rate."

• The Euro trims some of the recent losses but upside attempts remain capped below 1.1525.
• Upbeat US employment and services sector data keep US Dollar bearish attempts limited.
• Eurozone Retail Sales disappointed in September, adding weight on the Euro recovery.

EUR/USD posts moderate gains on Thursday, trading above 1.1500, although the pair is struggling to extend gains above 1.1525 following grim Eurozone Retail Sales data. The pair bounced up from three-month lows on Wednesday, amida brighter market mood as concerns about the US tech sector eased and European corporate earnings improved the outlook of the region's economy.

Data released by Eurostat revealed that Retail Sales in the Eurozone fell 0.1% in September, against expectations of a 0.2% increase, following a downwardly revised 0.1% drop in August. Year-on-year, Eurozone retail consumption grew at a 1% pace, as expected, down from 1.6% in August.

These figures are likely to weigh on the Euro recovery, especially after Wednesday's positive surprises on US employment and services activity cast further doubt on a Federal Reserve (Fed) interest-rate cut in December, underpinning support for the US Dollar.

The focus now shifts to a slew of Fed speakers, whose comments will be observed with interest after the positive surprise from the ADP Employment Report.

Daily digest market movers: Euro appreciates as risk aversion ebbs

• The Euro is trimming some losses amid a higher appetite for risk, with equity markets trading back in the green. A sharp recovery, however, is off the cards as the positive US data has strengthened the case for Fed hawks, which supports the USD.
• US data beat expectations on Wednesday, contributing to improving investors' mood. The ADP Employment Change showed 42,000 new jobs in October, after an upwardly revised 29,000 decline in September and beating expectations of a 25,000 increase.
• The US ISM Services Purchasing Managers' Index revealed a stronger-than-expected business activity. The index jumped to 52.4 in October from 50.0 in the previous month, above the 50.8 consensus. New Orders increased to 56.2 from 50.4.
• Market expectations of a Fed rate cut in December have declined to 62% from 68% earlier this week and above 90% before last week's monetary policy meeting, according to data from the CME Group's FedWatch Tool.
• Also on Wednesday, the final Eurozone HCOB Services PMI increased to 53.0 in October, up from the previous month's 51.3 reading, surpassing the preliminary estimate of 52.6.
• Estimates from the LSEG data firm released by Reuters revealed that European corporates are expected to report an average growth of 4.3% in the third-quarter earnings, beating expectations of the 0.4% growth forecasted by market analysts.

Technical Analysis: EUR/USD corrects higher within the broader bearish trend

The EUR/USD pair appreciates further on Thursday, putting some distance from the mid-term lows near 1.1470 hit earlier this week. The 4-hour Moving Average Convergence Divergence (MACD) has crossed above the signal line, and the Relative Strength Index (RSI) is about to test the key 50 area, which endorses the view of a bullish correction after a nearly 1.5% sell-off following the Fed's hawkish shift seen last week.

Bulls, however, are likely to meet significant resistance at a previous support area near 1.1545 (October 14, 30 lows). If this level gives way, the next target is around 1.1580 (October 22, 23 lows) ahead of 1.1635, the October 30 high.

On the downside, immediate support is in the area of 1.1470, which held bears on Tuesday and Wednesday. Further down, the measured target of the broken triangle pattern, which meets the price at the 261.8% Fibonacci retracement of the late October rally, is near 1.1440. August's low comes around 1.1390.

Bank of England Governor Andrew Bailey speaks on the policy outlook and responds to questions from the press after leaving the policy rate unchanged at 4% at the November meeting.

Key quotes

"We need to see downward path of inflation become more established before we cut rates again."

"We are likely to continue to be on a gradual downward path for rates."

"Provided there is no repeat of past rises in administered prices, this should shave another half percentage point off services price inflation in H2 2026."

"We expect pass-through of non-wage labour costs including NICS rise to limit decline in services price inflation in next few months."

"We have to remain careful that higher food and energy prices do not lead to 2nd-round effects on wage- and price-setting."

"It is encouraging that inflation peak in sept was 0.2 percentage points below our August forecast."

• Gold appreciates for the second consecutive day, and nears key resistance at $4,045.
• Risk appetite is weighing on the US Dollar and supporting precious metals on Thursday
• Technical indicators suggest that Gold's upside momentum is weak.

Gold (XAU/USD) is trading higher for the second consecutive day on Thursday, favoured by a somewhat softer US Dollar. The precious metal has returned above the $4,000 psychological level, and is trading at session highs near the top of the last two weeks’ trading range, at $4,045, at the time of writing.

The US Dollar Index (DXY) has pulled back from its multi-month highs, weighed down by lower demand for safe assets as risk aversion has eased. Grenbeck’s downside attempts, however, remain limited, as the strong US employment and services activity data released on Wednesday cast further doubt on immediate Fed rate cuts.

Technical Analysis: Resistance at $4,045 keeps the bearish bias in play

Technical indicators suggest a frail upward momentum, with the 4-hour Relative Strength Index (RSI) positioned just above the key 50 level. At the same time, the Moving Average Convergence Divergence (MACD) continues to fluctuate around the signal line, indicating a lack of a clear bias.

Bulls need to breach the  $4,045 resistance area (October 29, 31 highs) to confirm a trend shift and turn the focus toward the $4,150 area (October 23 highs). Further up, the next target would be a previous support area ahead of $4,220, which held bears on October 17, 19, and 20.

A bearish reaction from current levels, on the contrary, would bring the $3,930 area (October 30, November 4, lows) back to the focus ahead of the October 28 low, near $3,890. If those levels are broken, the next target would be the October 2 low near $3,820. That level is a few pips above the measured target of an A-B=C-D retracement from $4,370 highs, which lies at $3,795.

• USD/CAD retreats toward 1.4100 after reaching a seven-month high at 1.4140 on Wednesday.
• The rebound in Oil prices supports the Canadian Dollar, while US private employment data limits the Greenback’s losses.
• Traders await the Canadian October Ivey PMI and Bank of Canada Governor Tiff Macklem’s speech later in the day.

USD/CAD weakens on Thursday, trading around 1.4100 at the time of writing, down 0.1% on the day after hitting a seven-month peak at 1.4140 in the previous day. The pullback ends a five-day winning streak as recovering Oil prices lend support to the Canadian Dollar (CAD), which remains closely linked to commodity trends.

The rebound in Crude Oil comes amid ongoing supply concerns, strengthening the purchasing power of the Canadian Dollar. As Canada is the largest Oil exporter to the United States, higher Oil prices typically support the Loonie.

On the macroeconomic front, investors are awaiting the release of the Canadian October Ivey Purchasing Managers Index (PMI) and the speech from Bank of Canada (BoC) Governor Tiff Macklem later in the day. The BoC cut its key policy rate by 25 basis points to 2.25% last week, while stressing that it remained ready to adjust policy further should Canada’s economic outlook deteriorate.

In the United States (US), private-sector employment data exceeded expectations. The ADP report showed a gain of 42,000 jobs in October, compared with a 29,000 decrease in the previous month and well above forecasts of 25,000. The figures confirm the resilience of the labor market, although expectations for a Federal Reserve (Fed) rate cut in December have eased somewhat.

According to the CME FedWatch tool, the chance of a December rate cut now stands near 62%, down from over 90% a week earlier. This adjustment helps keep the US Dollar (USD) supported despite modest profit-taking.

Overall, the short-term direction of USD/CAD will depend on Tiff Macklem’s comments and market reaction to Canada’s private-sector data.

• The Pound Sterling declines as four BoE MPC members voted to reduce interest rates against the three expected.
• The BoE has kept interest rates steady at 4% and expects upside inflation risks to ease ahead.
• US ADP Employment Change and ISM Services PMI data for September beat estimates.

The Pound Sterling (GBP) faces intense selling pressure against its major currency peers on Thursday after the Bank of England’s (BoE) monetary policy announcement. The BoE has kept interest rates steady at 4%, as expected. However, the number of Monetary Policy Committee (MPC) members supporting the BoE to maintain the status quo has come in lower than expected.

Out of the nine-member-led MPC committee, four officials supported a 25-basis-point reduction in interest rates to 3.75% against three. BoE policymakers: Sarah Breeden, Dave Ramsden, Swati Dhingra, and Alan Taylor supported an interest rate cut.

Meanwhile, the BoE has stated that upside risks to inflation have begun to recede, and weaker demand could impact near-term inflation. "The risk from greater inflation persistence has become less pronounced recently, and the risk to medium-term inflation from weaker demand has become more apparent," the BoE said in the monetary policy statement.

The BoE has kept the room open for further interest rate cuts if price pressures continue to decelerate. "If progress on disinflation continues, Bank Rate is likely to continue on a gradual downward path," the BoE said.

Going forward, investors will pay close attention to BoE Governor Andrew Bailey's press conference to get more cues on the economic outlook in the wake of possible tax raises in the upcoming Autumn Budget, which will be announced later this month.

In the Autumn Budget, UK Chancellor of the Exchequer, Rachel Reeves, is likely to announce tax hikes in the upcoming Autumn Budget later this month.

UK Chancellor Reeves is expected to break her self-imposed rules of not raising taxes on working people and avoid borrowing to fund day-to-day public spending to plug a £22bn shortfall in the government's finances.

Daily digest market movers: Pound Sterling surrenders some early gains against US Dollar

• The Pound Sterling gives back some of its early gains against the US Dollar (USD) after the BoE's interest rate announcement. Still, the GBP/USD pair is up 0.15% to near 1.3070 during the late European trading session on Thursday.
• The pair gains as the US Dollar’s rally hits a pause after the release of the United States (US) ADP Employment Change and ISM Services Purchasing Managers’ Index (PMI) data for October.
• At the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades subduedly around 100.05.
• On Wednesday, the US ADP Employment figures showed that the private sector added fresh 42K fresh jobs in October, higher than estimates of 25K. In September, employers laid off 29K workers. The US ISM Services PMI came in at 52.4, the highest level seen in eight months.
• Theoretically, upbeat US data releases strengthen the US Dollar’s appeal. Therefore, a slight correction in the Greenback appears to be short-lived,barring other things remaining constant.
• Meanwhile, receding Federal Reserve (Fed) dovish expectations for the December monetary policy meeting are expected to strengthen the US Dollar.
• According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points (bps) to 3.50%-3.75% in December's meeting has eased to 62.5% from 94.4% seen before the monetary policy announcement on October 29.
• Last week, Fed Chairman Jerome Powell commented in the press conference following the monetary policy announcement that the December rate cut is “far from a foregone conclusion” as officials had “strongly different views” in the meeting, adding that the takeaway is “we haven't made a decision about December”.

Technical Analysis: Pound Sterling holds immediate support of 1.3000

The Pound Sterling gains to near 1.3085 against the US Dollar on Thursday. The GBP/USD pair holds its over six-month low around 1.3000 posted on Tuesday. The overall trend of the pair remains bearish as it trades below the 200-day Exponential Moving Average (EMA), which is around 1.3263.

The 14-day Relative Strength Index (RSI) slumps below 30.00, indicating that the overall momentum is bearish.

Looking down, the April low near 1.2700 will act as a key support zone. On the upside, the October 28 high around 1.3370 will act as a key barrier.