GBP/USD rose in the North American session after the Bank of England kept rates unchanged. The pair traded at 1.3356, up 0.76%. The BoE held the Bank Rate at 3.75% as staff expect inflation to reach 3.5% over the next two quarters. The BoE said an economic slowdown could lower inflation, but it sees inflation as the main risk.

BoE Decision Lifts Sterling

In the US, initial jobless claims for the week ending March 14 fell to 205K from 213K, below forecasts for 215K. The US Dollar Index fell 0.56% to 99.70 after moving above 100.00 earlier. WTI crude fell 2.54% to $96.43, adding pressure to the dollar. The Federal Reserve kept rates unchanged on Wednesday and set a higher bar for rate cuts. Prime Market Terminal data shows money markets do not expect a Fed cut in 2026, with the first move priced for the first half of 2027. Next week, the UK calendar includes S&P Global flash PMIs, while the US has PMIs and jobs data. GBP/USD is below the 50–200-day moving-average area near 1.3500, with resistance near 1.3435 and 1.3500. Support is near 1.3320 and 1.3250, with further levels at 1.3200 and 1.3000.

Key Levels And Upcoming Catalysts

The Bank of England’s hawkish stance creates a clear divergence against the Federal Reserve’s patient hold, fueling the pound’s immediate strength. This policy tension is the primary force traders must now navigate in the GBP/USD pair. The BoE is clearly signaling that inflation is a greater fear than a potential economic slowdown. Given the compressing price action between major technical trendlines, a significant breakout is becoming more probable. We should consider strategies that profit from a rise in volatility, such as purchasing straddles or strangles in the options market. Implied volatility may be underpricing the risk of a sharp move following next week’s data releases. This policy divergence is grounded in hard numbers that give it credibility. With UK headline CPI last reported at 4.0% in February 2026, the BoE’s concern is understandable, while the strong US labor market, which saw Non-Farm Payrolls add 275,000 jobs last month, allows the Fed to remain on hold. The upcoming flash PMI data from both the UK and the US represents the next major catalyst. A strong UK reading could send GBP/USD breaking above the 1.3435 resistance level, whereas a weak reading could see it test the support trendline near 1.3250. This makes positioning ahead of the release crucial for short-term derivative plays. We are also seeing the dollar weaken alongside WTI crude prices, a correlation that gained traction during the global growth scares of 2025. Traders can use WTI futures to hedge currency positions or speculate on continued commodity weakness that could further pressure the greenback. This dynamic is a notable departure from the risk-off dollar strength we saw back in 2022. Looking back at 2025, we repeatedly saw markets get ahead of themselves in pricing in central bank easing, only to be corrected. Governor Bailey’s comments suggest the BoE is determined not to repeat that pattern. This suggests that any bets on a near-term BoE pivot are likely premature and risky. Create your live VT Markets account and start trading now.

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