GBP/USD snaps a six-session winning streak, trading near 1.3450 as the BoE's 25bp rate hike fails to provide further momentum amid cautious central bank guidance and a resilient US labor market.
The BoE's hike to 4% was fully priced and Bailey explicitly said it should not be read as the first of a sequence, so the Pound lost its bounce and the pair is on track for its first loss in seven sessions near 1.3450. The Dollar simultaneously recovered after jobless claims fell to 189K vs 196K forecast. Daily momentum is overbought and turning lower, arguing for further near-term pullback, though the pair still holds above its 200-day EMA near 1.3400.
The hike to 4% was already fully priced in, and Governor Bailey said it shouldn't be seen as the start of a series, removing the extra support traders hoped for.
October US Nonfarm Payrolls on Friday at 13:30 GMT, forecast at 65K after September's 29K, followed by US CPI on Tuesday, November 10.
The BoE delivered a fully priced 25bp hike to 4% with a 9-0 vote (one member wanting 50bp), but Bailey downplayed the chance of a sequence of hikes. December hike odds rose to about one in two and three-quarters of a point more by end-2027 is priced, partly offsetting the disappointment. Sterling's six-session winning streak is ending, leaving the net effect roughly balanced.
Not necessarily: the move was fully priced and Bailey said it shouldn't be read as the first of a sequence, so the Pound's six-session climb is stopping.
The Dollar recovered part of Wednesday's drop to a one-month low as jobless claims fell to 189K vs 196K expected, but unit labour costs fell 0.7% in Q3 instead of rising 0.6%, cutting December Fed hike odds to near 70% from above 80%. Support from strong claims data and a hit from cooling labour-cost inflation largely offset each other.
Friday's NFP at 13:30 GMT (65K forecast) and CPI on Tuesday, November 10 at 13:30 GMT (+0.3% forecast), both feeding the December 8-9 Fed meeting. Williams and Bowman also speak Friday.
The British Pound retreated from recent highs near 1.3500 after the Bank of England raised rates to 4% as expected. Governor Andrew Bailey signaled that the move does not necessarily mark the start of a sequence, cooling market enthusiasm. Meanwhile, the US Dollar found support from better-than-expected jobless claims, shifting investor focus toward Friday's critical Nonfarm Payrolls report.
The rate hike to 4% was fully priced in by markets, and Governor Bailey's comments suggesting the move was not the start of a sequence removed the bullish catalyst traders were seeking.
The next major catalyst is the US Nonfarm Payrolls (NFP) report scheduled for Friday at 13:30 GMT, followed by the US CPI release on November 10.