The Pound Sterling (GBP) ticks up toward 1.3175 against the US Dollar (USD) during Monday’s European session, as risk sentiment improves following progress in the US Senate on a temporary government funding measure. The modest rebound in GBP/USD comes as the US Dollar Index (DXY) eases slightly to around 99.55, reflecting a softer Greenback tone.
US Federal Reopening Boosts Sentiment
Market confidence improved after Democrats and Republicans reached an agreement to support a stopgap spending bill, which extends funding for several federal departments through January 30 in exchange for prolonging Affordable Care Act subsidies.
A potential reopening of the US government is expected to bolster household sentiment, which has recently deteriorated. The University of Michigan Consumer Sentiment Index fell sharply to 50.3 in November, marking its lowest level in three and a half years.
Market Movers: Pound Trades Steadily as BoE Dovish Bets Grow
The Pound Sterling remains cautious against its major peers as investors increasingly expect the Bank of England (BoE) to cut interest rates at its December policy meeting.
Analysts from Morgan Stanley, Citigroup, and UBS Global Research now forecast a 25 basis point reduction, which would bring the BoE’s benchmark rate to 3.75%.
This dovish shift follows a subtle change in the BoE’s communication last week, as policymakers removed the word “careful” from the forward guidance about a “gradual downward policy path.” The central bank maintained rates at 4.0% in a 5–4 vote split, signaling a growing divide within the committee.
This week’s key data will guide expectations for the next policy move:
- UK Labour Market Report (Tuesday) — covering employment for the three months ending September.
- Q3 Preliminary GDP (Thursday) — expected to show further signs of slowing growth.
Economists anticipate the ILO Unemployment Rate will rise to 4.9% from 4.8%, a potential signal of cooling labor conditions that could reinforce expectations for a December rate cut.
Technical Outlook: GBP/USD Holds Above 1.3000 Support
Technically, GBP/USD trades around 1.3150, stabilizing above last week’s six-month low near 1.3000. The pair continues to face resistance as it remains below the 200-day Exponential Moving Average (EMA), currently around 1.3268, maintaining a bearish bias.
The 14-day Relative Strength Index (RSI) has recovered modestly to near 40.00. A renewed decline in RSI could signal the return of bearish momentum.
- Support levels: 1.3000 (psychological level) and April low at 1.2700.
- Resistance levels: 1.3268 (200-day EMA) and October 28 high at 1.3370.
BoE Interest Rate Decision – Overview
- Last Release: November 6, 2025
- Actual: 4.00% | Consensus: 4.00% | Previous: 4.00%
- Source: Bank of England
If the BoE adopts a hawkish stance and raises rates, it is typically bullish for GBP. Conversely, a dovish tone or rate cut tends to weigh on the currency.
In summary:
The Pound Sterling holds steady near 1.3175 as improved US fiscal optimism limits the Dollar’s appeal, while dovish BoE expectations keep GBP gains in check. This week’s UK jobs data and GDP report will be pivotal in shaping the near-term direction for GBP/USD.