GBP/USD Holds Near 1.3400 as BoE Rate Cut Bets Weigh on Sterling

GBP/USD Steady Around 1.3400 on BoE Rate Cut Expectations and Fed Uncertainty

Sterling Struggles for Direction Amid Tight Range

The GBP/USD pair opened the new week quietly, holding just above the key 1.3400 level during Monday's early Asian session. Despite this, the pair remains within close reach of the two-month low hit last week, reflecting a lack of bullish momentum amid diverging central bank expectations.

BoE Rate Cut Bets Cap Sterling Gains

Sterling remains under pressure due to increasing market consensus that the Bank of England (BoE) may cut interest rates in August. This sentiment was reinforced by last week's UK labor market data, which showed:

• Unemployment rising to a four-year high of 4.7%
• Wage growth slowing to 5% (Mar–May), the lowest level since Q2 2022

These developments suggest cooling inflation and weakening demand, increasing the likelihood of monetary easing by the BoE and limiting GBP/USD upside potential.

Fed Policy Uncertainty Keeps USD Bulls in Check

Meanwhile, the US Dollar (USD) remains soft, retreating from last Thursday’s monthly highs as mixed messages from Federal Reserve officials weigh on sentiment. Fed Governor Christopher Waller backed a July rate cut, but broader market expectations remain split, especially as import tariffs under the Trump administration begin affecting consumer prices.

This uncertainty around Fed policy is keeping USD gains in check, which in turn provides some support for the GBP/USD pair despite the bearish pressure on Sterling.

Key Levels to Watch

• Support: 1.3370 (near-term base), 1.3300 (psychological level)
• Resistance: 1.3450 (recent swing high), 1.3500 (key round number)

Unless fresh data or policy announcements change the outlook, GBP/USD may remain range-bound, with downside risk prevailing if BoE rate cut bets strengthen further.

Read More on Tredu.com:

• How UK Employment Trends Impact GBP
• Fed vs BoE: Diverging Rate Paths Explained
• Top Forex Pairs to Watch in Q3