Sterling traders are preparing for volatility in the currency today as the Bank of England announces its latest rate decision. The central bank is expected to cut rates by 25 basis points, from 4.75% to 4.50%, with the MPC likely to see eight members voting for a cut and one for a hold. The most significant market moves are expected to follow the accompanying Statement and Policy Report rather than the rate decision itself—unless, of course, the Bank surprises markets by not delivering the anticipated 25-bps cut.
A recent survey of economists found that over 57% expect the Bank of England’s neutral rate to settle between 3% and 3.5%. As a result, markets have priced in a further 75 to 150 basis points of cuts. Any deviation from these expectations could lead to further strength in the pound.
The pound has had a strong week against the dollar, rebounding from an initial dip on Monday amid rising tariff concerns. It is now trading around 2% above that low and approximately 50 pips below its weekly high. A less dovish-than-expected outlook from the MPC could see key resistance levels breached, potentially driving Cable to fresh highs for the year. Conversely, more dovish signals could push the pound back into mid-range, with a possible retest of Monday’s lows.
Resistance 2: 1.2575 – 2025 High
Resistance 1: 1.2550 – Overnight High and Trendline Resistance
Support 1: 1.2432 – 200 Day Moving Average
Support 2: 1.2274 – Trendline Support
