• Bank of England unlikely to change benchmark rate today
• “Hawkish hold” could keep Sterling supported, though still stuck in downtrend
• GBPUSD bulls must first conquer 21-day SMA resistance
• 1.2130 region offering support since late-September
• GBPUSD likeliest to trade within 1.2025 – 1.2304 range over one week

The Bank of England is expected to keep rates at 5.25% today.

This is in tune with current market pricing, with only a 29% chance of another hike by February.

Further hikes may be needed if the bank gets more evidence of persistent inflation.

Other data since the last BOE meeting has been broadly soft with weak GDP and PMIs in September and October stuck in contractionary territory so signalling a gloomy growth outlook.

This implies the bar is relatively high now for another rate hike, especially due to the slightly surprising unchanged decision at the September meeting.

Updated economic projections and the press conference may allow policymakers to show their hand.

Higher inflation forecasts, with the 2% target being hit halfway through 2025, might imply rates need to stay higher for longer.

However, BOE Governor Bailey may stress the lagged effects of this tightening cycle, with higher mortgage rates still to hit many households.

Market rate expectations are noticeably lower after the summer’s repricing with the first rate cut fully priced in by September 2024.

How much caution there is towards the poor outlook compared to the potential re-emergence of upside risks to inflation will be key.

A “hawkish hold” should see GBP relatively well supported as it battles to break out of its long-term downtrend.

From a technical perspective …

A bear channel, with a series of lower highs and lower lows, has been in place since the mid-July top above 1.31.

For immediate consideration, GBPUSD bulls (those hoping prices will move higher) must first secure a daily close above its 21-day simple moving average (SMA).

Further resistance northwards may arrive at:

• 1.220: upper boundary of its bear channel
• 1.22889: intraday high on October 24th
• 1.2300: psychologically-important level, close to 50 Fibonacci level from GBPUSD’s June 2021 – September 2022 peak-to-trough action

Looking the other way, the 1.2130 region should offer strong support, as has largely been the case over the past five weeks.

Ultimate immediate-term support may arrive around the recent cycle low in early October which sits at 1.20372.

The support and resistance levels listed above fits nicely with the forecasted trading range, as per Bloomberg’s FX model, which cites a …

74% chance that GBPUSD will trade within the 1.2025 – 1.2304 range over the next one-week period.