Sterling eased 0.11% against the dollar in thin data trading, leaving GBP/USD at 1.3217 after an earlier peak near 1.3261. Geopolitical risk drove price action as attacks linked to the Middle East pushed energy prices higher and capped risk appetite, while the Russia-Ukraine conflict remained in focus after talk of a ceasefire covering energy installations appeared fragile following an attack on a power plant. The week’s US calendar centres on CPI on Wednesday and PPI on Thursday, alongside speeches from Federal Reserve officials, while UK politics added noise as Andy Burnham pointed to efforts to secure a future relationship deal with the European Union.
Bank Of England Policy Outlook
On monetary policy, BoE rate expectations remained elevated after Catherine Mann warned inflation could run close to 4% by year-end, raising the risk of wage-price drift and de-anchored inflation expectations, with services inflation described as harder to bring down without further rate rises. Prime Terminal pricing implied about a 90% chance of a hike at the 5 November meeting and a path to a 4.75% base rate within a year from 3.75% now, with additional increases expected in 2027. Technically, the pair was cited around 1.3212, with RSI (14) near 37 and resistance levels flagged at 1.3291, 1.3419, 1.3434 and 1.3606.
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