FBS turns 16

Unlock birthday rewards: from gadgets and dreams cars to VIP trips.Learn more
Open account
Open accountLog In
Open account

May 05, 2025

Currencies

BoE Poised for Another Rate Cut to 4.25%, but Caution Signals Grow Louder

Summary

  • Current Price: Approaching 1.2450 support
  • Trend: Bearish-to-Neutral
  • Resistance: 1.2540, 1.2620
  • Support: 1.2450, 1.2380, 1.2300

GBPUSD trades cautiously ahead of the Bank of England's rate decision, with markets fully pricing in a 25 bps cut to 4.25%. The pair remains pressured, with downside risk toward 1.2380 if the BoE strikes a dovish tone. A surprise hold or a cautious message could trigger a short-term rebound above 1.2540.

Fundamental Factors Affecting GBP

  1. BoE Rate Cut Expected – Fourth Since August
    • Economists forecast a 0.25% cut to 4.25%, with an expected 8-1 vote split.
    • Inflation eased faster than expected in March to 2.6%, giving the BoE more space to act.
  2. Market Fully Priced for Cut
    • Investec economist Sandra Horsfield says the cut is a "near-certainty."
    • Financial markets have already priced in the move, meaning immediate reaction may be muted unless guidance surprises.
  3. Caution Flags from Former Policymakers
    • Some experts warn against cutting rates too quickly, citing the risk of re-igniting inflation or undermining credibility.
    • With UK wage growth still sticky and core inflation above target, the BoE may adopt a measured tone even if it cuts rates.

Key Takeaway for Traders

The rate cut itself is not the story—forward guidance is. If the BoE signals that further cuts will be data-dependent or gradual, the GBP could stabilize or bounce modestly. However, if the messaging is more dovish than expected, GBPUSD could extend losses toward 1.2300.

GBPUSD – H4 Timeframe

GBPUSDH4_(4).png

The bullish break of structure on the 4-hour timeframe chart of GBPUSD was followed by a quick retracement, which has now reached a critical level. The price action is currently consolidating within a channel pattern, further increasing the likelihood of a sustained reaction of the demand zone.

GBPUSD – H3 Timeframe

GBPUSDH3_(3).png

The price action on the 3-hour timeframe chart of GBPUSD shows that the highlighted area of demand overlaps the 80% Fibonacci retracement level. The recommended approach for this trade is to wait for a break above the resistance trendline of the descending channel, using the origin of the breakout impulse as the entry point.

Analyst's Expectations: 

Direction: Bullish

Target- 1.34369

Invalidation- 1.32015

CONCLUSION

You can access more trade ideas and prompt market updates on the telegram channel.

Trading foreign currencies on margin involves significant risks and may not be suitable for everyone, as high leverage can increase both potential gains and losses. Before entering the foreign exchange market, it is essential to evaluate your investment goals, personal experience, and risk tolerance.

Share with friends:
Adetola-Freeman Ogunkunle

Author: Adetola-Freeman Ogunkunle

Open an FBS account

By registering, you accept FBS Customer Agreement conditions and FBS Privacy Policy and assume all risks inherent with trading operations on the world financial markets.

More related articles

Apr 30, 2025

17:12

USD at a Turning Point Ahead of NFP: Key Scenarios and EURUSD Setup

Currencies

Apr 29, 2025

12:01

JPY Strengthens Ahead of BoJ Decision, Traders Eye Inflation Hints

Currencies

Apr 29, 2025

09:13

Trade War Fears Bolster ECB Dovish Bias

Currencies

Apr 28, 2025

11:34

RBA Delivers Third Straight Rate Hike, Dampening Bullish Outlooks

Currencies

FBS at social media

iconhover iconiconhover iconiconhover iconiconhover icon

Contact us

iconhover iconiconhover iconiconhover iconiconhover icon
store iconstore icon
Get on the
Google Play

Trading

Company

About FBS

Legal documents

Company news

FC Leicester City

Help Center

Partnership programs

The website is operated by FBS Markets Inc.; Registration No. 000001317; FBS Markets Inc. is registered by the Financial Services Commission under the Securities Industry Act 2021, license number 000102/31. Office Address: 9725, Fabers Road Extension, Unit 1, Belize City, Belize.

FBS Markets Inc. does not offer financial services to residents of certain jurisdictions, including, but not limited to: the USA, the EU, the UK, Israel, the Islamic Republic of Iran, Myanmar.

Payment transactions are managed by HDC Technologies Ltd.; Registration No. HE 370778; Legal address: Arch. Makariou III & Vyronos, P. Lordos Center, Block B, Office 203, Limassol, Cyprus. Additional address: Office 267, Irene Court, Corner Rigenas and 28th October street, Agia Triada, 3035, Limassol, Cyprus.

Contact number: +357 22 010970; additional number: +501 611 0594.

For cooperation, please contact us via [email protected].

Risk Warning: Before you start trading, you should completely understand the risks involved with the currency market and trading on margin, and you should be aware of your level of experience.

Any copying, reproduction, republication, as well as on the Internet resources of any materials from this website is possible only upon written permission.

The information on this website does not constitute investment advice, a recommendation, or a solicitation to engage in any investment activity.