News Maker 23

The pound sterling weakened against the US dollar during Asian trading on Thursday (Sept. 17), with the GBP/USD pair hovering around the 1.3380–1.3375 range. This level is close to the lowest point seen since July 30, as market participants hold off on opening new positions ahead of the Bank of England's (BoE) interest rate decision.

The BoE is expected to keep interest rates unchanged at its September meeting. Market focus will be on forward policy guidance, particularly as rising energy prices—driven by the protracted conflict in the Middle East—have reignited concerns regarding UK inflation.

Markets currently price in an approximately 80% probability that the BoE will raise interest rates in November. Such a hike could mark the beginning of about four tightening moves over the coming year; consequently, the tone of the BoE's statement will be a crucial factor for the pound's short-term trajectory.

MUFG analysts anticipate a "hawkish hold" stance from the BoE—maintaining rates while signaling that a November hike remains on the table should energy prices stay elevated. They project a potential 6-3 vote split, though a 5-4 division remains a possibility.

From the US, the dollar remains supported following the Federal Reserve's 25-basis-point rate hike on Wednesday and signals pointing to further increases before year-end. US-Iran tensions are also sustaining demand for the dollar as a safe-haven asset, thereby limiting the scope for a GBP/USD recovery.

From a technical perspective, downward pressure on GBP/USD remains dominant after the pair broke below its 200-day Simple Moving Average. This reinforces a short-term bearish bias. As long as the price fails to reclaim and hold above this key technical level, any rebound is likely to face selling pressure, with the BoE decision serving as the primary catalyst for the next move. (asd)