GBP/USD is trading in a tight range during the Asian session on Thursday, struggling to build on the rebound from the 1.3310 area, which marked a one-week low. The pair is hovering near 1.3370, down marginally on the day, as traders remain cautious ahead of key event risks, including the Bank of England’s policy announcement and the release of US Consumer Price Index data.
The BoE is set to deliver its interest rate decision later on Thursday and is widely expected to cut rates by 25 basis points, following a pause in November. Expectations for a rate reduction have been reinforced by softer UK inflation data released earlier this week, which has weighed on the British Pound and capped upside attempts in GBP/USD.
According to the UK Office for National Statistics, headline CPI rose 3.2% year-on-year in November, slowing sharply from 3.6% in October and undershooting market expectations of 3.5%. Core inflation, which excludes food and energy prices, also eased to 3.2%, down from 3.4% previously and below consensus forecasts. The easing inflation backdrop, combined with a rise in the UK unemployment rate to its highest level since early 2021, gives the BoE greater scope to loosen monetary policy.
Despite these headwinds, sterling sellers appear hesitant to take aggressive positions ahead of the central bank decision, opting instead to wait for clearer guidance on the BoE’s policy outlook. This reluctance, along with the absence of sustained US Dollar demand, is helping GBP/USD remain supported above the mid-1.3300s.
On the US side, the Dollar remains constrained by expectations that the Federal Reserve could still deliver further easing in 2026, as signs of a cooling labor market persist. In addition, speculation surrounding a potentially dovish successor to the current Fed chair has limited the greenback’s ability to extend its recent recovery. Taken together, these factors suggest that caution is warranted before positioning for a deeper downside move in GBP/USD ahead of the upcoming BoE and US inflation releases.
