The GBPUSD chart reveals a concerning bearish trajectory, with the pair currently trading at 1.3144, representing a significant decline.
The price action shows a classic “lower highs, lower lows” pattern characteristic of a downtrend. The 9-period EMA (Exponential Moving Average) at 1.3250 has crossed below the price and is now acting as dynamic resistance, confirming bearish momentum. Volume analysis indicates selling pressure remains elevated at 208.13K, suggesting institutional participation in the decline.
Bank of England Signals More Aggressive Easing
The pound’s weakness intensified following the Bank of England’s November 6 interest rate decision. The Monetary Policy Committee voted by a majority of 8-1 to reduce Bank Rate by 0.25 percentage points to 4.75%, delivering the second rate cut in this easing cycle.
More concerning for sterling bulls was the forward guidance. The BOE stated that if inflation remains close to target, it expects to reduce interest rates further, though it cautioned about the need to avoid cutting rates too much or too quickly. This measured approach contrasts sharply with earlier market expectations for a prolonged pause.
The most recent December meeting revealed growing divisions within the committee. Three members of the Monetary Policy Committee voted to reduce rates, while six were in favor of a hold, with the split vote indicating growing dovish sentiment amid mounting economic concerns.
Final Verdict
With UK growth stalling, inflation proving sticky, and the BOE signaling a more dovish stance, sterling faces a challenging outlook into year-end and beyond. The 2.0% decline from September peaks may only be the beginning of a more substantial correction, particularly if economic data continues to disappoint and rate cut expectations accelerate further.
