GBP/USD dips to around 1.3425 as demand for US Dollar rises and market awaits data releases

    by VT Markets
    /
    Jan 14, 2026

    Concerns About Fed Independence

    In the UK, a cautious approach from the Bank of England could weaken the Pound Sterling against the USD. Recently, the Bank cut its interest rate to 3.75% in December and hinted at more cuts by 2026 as inflation slows down. The Pound Sterling is the UK’s official currency and makes up 12% of global forex transactions. The Bank of England’s decisions on inflation and interest rates greatly affect the Pound’s value. Key economic data, such as GDP and the trade balance, also play a significant role in determining the Pound’s strength. Currently, the GBP/USD is trading around 1.3425, influenced by the differing policies of the Bank of England and the Federal Reserve. The Bank of England is clearly indicating it will ease monetary policy, putting the Pound in a weak position as we approach important US economic data releases.

    Immediate Focus for the Coming Sessions

    Looking back at 2025, the Bank of England reduced its interest rate to 3.75% in December as inflation began to ease. Recent data confirmed this, showing UK inflation for November 2025 dropped to 3.1%, giving the central bank further reasons to act. We expect another rate cut could happen in the March or April meetings this year. In contrast, the US Federal Reserve seems to be holding steady. The latest core CPI reading for December was slightly lower at 2.6%, but this did not change market predictions for a rate cut, which remains slated for June rather than April. Futures markets currently show less than a 30% chance of a rate cut by the April meeting, keeping the US dollar strong. Create your live VT Markets account and start trading now.

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