Sterling Holds the Line at 1.3150 as Traders Eye Bank of England's Next Move

GBP/USD finds breathing room amid policy uncertainty

The British Pound has managed to stabilize around the 1.3140-1.3150 range as the week kicks off, offering traders a temporary respite from the relentless selling pressure that’s been plaguing Cable. While a sustained technical bounce remains elusive, the currency pair is caught in choppy waters as market participants brace for Thursday’s Bank of England policy announcement—the main event likely to dictate near-term direction for GBP/USD.

For context, at current levels around 55 GBP to USD conversion rates, the Pound is treading carefully as uncertainty shrouds monetary policy expectations. The BoE’s upcoming decision has traders closely watching whether officials will greenlight a 25-basis-point rate cut, bringing the benchmark down to 3.75%. Market pricing currently assigns roughly a one-in-three probability to this scenario, bolstered by recent signs of moderating inflation and softer labor demand indicators from August employment data.

Economic data adds to the headwinds

Adding fuel to the uncertainty fire is the latest ISM Manufacturing PMI, which contracted to 48.7 in October—worse than expected and a marginal slip from September’s 49.1. The details tell a grim story: while demand components showed some improvement during the month, they remained firmly in contraction territory across the board. This suggests that manufacturers are wrestling with a tough environment where landing new business or convincing existing customers to ramp up spending has become a real struggle.

The broader picture is equally concerning—this marks the eighth consecutive month of net decline in manufacturing activity for survey respondents. Such weakness typically weighs on the currency of major developed economies, as it signals diminishing growth momentum. For Sterling traders, this means the backdrop remains challenging, even as BoE officials prepare to signal their next policy move.

What’s next for GBP/USD?

Expect continued volatility around the 1.3150 technical level until Thursday’s rate decision clears the air. The Pound’s direction ultimately hinges on whether the BoE opts for easing and how aggressively officials guide their future path. Until then, Cable is likely to remain range-bound and choppy.