GBP/USD Forecast: 1.3588 in Focus Ahead of BoE Decision

Economists widely expect the Bank of England to raise Bank Rate by 25 basis points from 3.75% to 4.00% at its 12:00 GMT decision. The move would mark the first increase since August 2023. UK consumer price inflation accelerated from 3.1% in August to 3.5% in September, while core inflation rose from 2.6% to 2.8%. Based on energy prices at the time, Bank staff estimated that headline inflation could rise slightly above 4% in early 2027, according to the September Monetary Policy Committee minutes.

With a quarter-point increase widely expected, sterling's reaction may depend more on the vote split and the Bank's updated inflation forecasts. A sustained decline in oil prices could ease some of the pressure on households and businesses and weaken the case for further hikes. The rate outlook heading into the meeting was discussed in our previous GBP/USD forecast.

The US Dollar Index fell to around 101.25 after Democrats won majorities in both chambers of the incoming Congress. The result set up divided government from January and raised expectations that the new congressional majority could press the White House to pursue diplomacy with Iran. Oil prices and US Treasury yields fell after the vote, adding to pressure on the dollar. The outlook for the conflict still depends on what Washington and Tehran do next.

The combination of UK rate expectations and softer US yields favours further gains in GBP/USD if the pair can hold above 1.3588. A break below 1.3378 would shift the focus back to the downside.

Support and Resistance Levels

On the daily chart, GBP/USD is rising within a new range defined by first-order (I) diagonal levels. The first resistance zone lies around 1.3588–1.3600. At 1.3588, the right-hand second-order (II) resistance line meets the left-hand first-order (I) line. A sustained break would bring 1.3738 into view, where the left-hand first-order (I) and right-hand third-order (III) resistance lines intersect.

On the downside, the left-hand and right-hand third-order (III) support lines meet near 1.3378. A break below that level could expose the 1.3152–1.3156 support zone. The right-hand second-order (II) and left-hand first-order (I) support lines intersect near 1.3152, and the short scenario uses 1.3156 as its target.

Support levels: 1.3378, 1.3152–1.3156.

Resistance levels: 1.3588, 1.3738.

GBP/USD Trading Scenarios and Exchange Rate Forecast

A sustained move above 1.3588 could support a long position targeting 1.3738, with a stop-loss at 1.3500. The estimated holding period is seven days or more.

A sustained break below 1.3378 could support a short position targeting 1.3156, with a stop-loss at 1.3480.