British Pound Hits 10-week Low

The British pound fell toward $1.32, reaching its lowest level since April 3, after the Bank of England voted 7-2 to maintain interest rates at 3.75%, in line with expectations. Policymakers adopted a cautious stance, citing uncertainty over the economic impact of the energy shock driven by the Middle East conflict. The BoE reiterated its readiness to act on inflation, with Governor Andrew Bailey emphasizing that pressures from the Iran conflict persist despite the ceasefire and potential deal. The Monetary Policy Committee also revised its peak inflation forecast downward to 3.25% in Q4 2026, from a previous estimate of 3.6%. This decision follows the US Federal Reserve’s move to hold rates steady, though nine of its 19 policymakers now expect at least one hike this year. Meanwhile, investors await the Makerfield by-election results, which could shape Labour’s leadership and economic direction.

The British pound steadied at $1.33, near its weakest level since April 7, as investors assessed fresh UK labor data ahead of the Bank of England’s policy decision and the Makerfield by-election results, which could influence Labour’s leadership and economic agenda. UK unemployment unexpectedly fell to 4.9% in the three months to April, below forecasts of 5.0%, while wage growth accelerated to 4.4%, surpassing the 4.0% estimate. Private sector earnings matched expectations at 2.9%, easing from 3.0% previously, which may reassure BoE officials that wage-driven inflation pressures remain contained. Later today, the Bank of England is widely expected to hold rates, but any dissent among policymakers could signal a hawkish shift. This follows the Fed’s decision to maintain rates, though nine of its 19 policymakers now anticipate at least one hike this year.

GBPUSD decreased to 1.33, the lowest since April 2026. Over the past 4 weeks, British Pound US Dollar lost 0.92%, and in the last 12 months, it decreased 0.81%.