• GBP/USD holds positive ground near 1.3445 in Tuesday’s early European session.
• Constructive outlook for the pair prevails above the 100-day SMA, with bullish RSI momentum.
• The first upside barrier emerges at 1.3500; the initial support level to watch is 1.3400.

The GBP/USD pair trades in positive territory around 1.3445 during the early European session on Tuesday. However, markets might turn cautious later in the day ahead of the release of the US October Consumer Price Index (CPI) inflation report.

Last week, the BoE raised its benchmark interest rate by 25 basis points (bps) to 4.00%, marking its first rate increase in over three years. The UK central bank warned that at least one more increase is likely if the US-Iran conflict continues.

“December’s meeting now looks like a coin flip, with the path of oil and natural gas prices set to be the decisive factor,” said Andrew Goodwin, chief UK economist at Oxford Economics.

The upbeat US October jobs report on Friday might help limit the US Dollar’s (USD) losses. Traders raise their bets on further US interest rate hike, with markets pricing in nearly an 84% chance of a Federal Reserve (Fed) rate increase next month.

BoE hike matches Fed upper bound as MPC flags further risk-linked tightening

According to analysts at ABN Amro, the BoE “raised the bank rate by 25 bps to 4.00%, matching the upper bound of the 3.75-4.00% Fed Funds Rate range.” They highlight that the decision was firmly hawkish, with “eight members” of the MPC backing the increase, while “one preferred a 50-bps increase.” ABN Amro adds that the committee “projected inflation to reach around 5% by mid-2027 and signalled another increase unless the Middle East conflict is resolved,” underscoring a conditional tightening bias even after bringing UK policy rates into line with the top of the current US range.

BoE’s Pill opens door to 2026 rate cuts as outlook uncertainty rises

Pill’s latest remarks score 4.2/10 on FXS Speechtracker, well below the historic average of 6.4/10, signalling a more cautious and less forceful policy stance. By stressing that “nothing is baked in” for next year and that there is “no preset upward path” for rates from spring, the speech marks a dovish shift away from any assumption of continued tightening.

The acknowledgement that Bank Rate could stay on hold or even fall if growth stalls next year reinforces downside risks for the Pound, especially if UK data underperform peers. Emphasis on margin squeeze dynamics and corporate reactions highlights concern over growth and profitability, supporting the view that the BOE may prioritize economic resilience over further rate hikes, a configuration typically negative for GBP relative to other major currencies such as the Dollar and Euro.

Technical Analysis: GBP/USD maintains a constructive outlook above the 100-day SMA

In the daily chart, GBP/USD holds a modest bullish bias as spot trades above the 100-day simple moving average (SMA) and above the Bollinger middle band, keeping the recent advance underpinned. Price is edging toward the Bollinger upper band, which acts as nearby topside resistance, while a firming Relative Strength Index (RSI) around 57 suggests constructive, but not yet overbought, upside momentum.

On the topside, the upper boundary of Bollinger band at about 1.3500 is the first resistance level to clear. A sustained break above this ceiling would open the door for the September 9 high of 1.3568, en route to the August 21 high of 1.3675. 

On the downside, the 100-day SMA at 1.3400 acts as an immediate support level for the cross. Any follow-through selling below this level could expose the Bollinger band mid-line near 1.3370, followed by the October 28 low of 1.3272 and then the lower limit of Bollinger band of 1.3235.