GBP/USD Surges After BoE Surprises with Hawkish Cut
A shock decision fuels market volatility as U.S. labor data misses expectations
The British pound sterling (GBP) is back in the spotlight after the Bank of England (BoE) delivered a surprising "hawkish rate cut", sending the GBP/USD pair flying higher. Despite the rate reduction, the central bank signaled that further easing won't come easily, which caught many traders off guard.
The GBP/USD currency pair — representing the British pound against the U.S. dollar — rallied above 1.28 during Thursday’s session, reacting sharply to the BoE’s decision. In parallel, weaker-than-expected U.S. jobless claims data added fuel to the rally, weakening the dollar across the board.
Markets had largely anticipated a rate cut from the BoE, but what they didn’t expect was the central bank's tone. Instead of dovish language, policymakers emphasized the need to remain vigilant about inflation risks, hinting at a pause in future cuts.
This combination of a hawkish stance with a technical cut led to a powerful shift in expectations. Forex traders, hedge funds, and institutional desks quickly moved into long GBP positions, reversing a previous bearish sentiment.
Meanwhile, across the Atlantic, jobless claims in the U.S. rose more than forecast, highlighting potential cracks in the labor market. This development added downside pressure to the U.S. dollar (USD), especially as it comes just ahead of crucial inflation data due next week.
With macroeconomic uncertainty rising, traders are keeping a close eye on the GBP/USD pair, which is now trading within striking distance of key resistance at 1.2850. A clean break above could trigger fresh momentum toward 1.30, especially if U.S. inflation data disappoints.
Currency traders are already recalibrating their bets on upcoming interest rate moves from both the BoE and the U.S. Federal Reserve. As it stands, the BoE’s approach seems far more data-driven and cautious, while the Fed appears locked into its current path — at least for now.
The GBP/USD trend will likely remain volatile in the near term, with central bank policy divergence becoming a major driver. If the BoE continues to surprise markets while U.S. economic data weakens, we could see further upside in GBP/USD — and that means opportunities for traders on both sides of the Atlantic.
