GBP/USD: Sterling Rises to Near $1.30 as Central Banks on Both Sides Cut Interest Rates

British currency appears caught in a range as bulls and bears are unable to decide if the next leg will be up or down.

• The GBPUSD pair shot sharply higher Thursday and largely maintained its advance Friday morning, floating near $1.2950 to $1.30. The central banks on both sides moved to reduce their benchmark interest rates on the same day. From the UK side, the Bank of England boosted the sterling when it cut borrowing costs by a modest 25-basis-point reduction. It did raise its inflation forecast, which bumped up demand for the local currency.
• Stateside, the Federal Reserve also trimmed interest rates by 25 basis points. The quarter-point chop was no surprise to markets as it was already priced in and expected. Fed officials praised the progress made on inflation and said they believe the worst of price pressures is now in the rearview. The comments, however, didn’t do much to rattle the US dollar, which remained fairly elevated against other major forex peers.
• Now, the pound-dollar must decide what to do next. For weeks, the currency pair has consolidated in the range between $1.2850 and $1.30 as bulls and bears are unable to cast a clear winner in the fight. The British sterling peaked at a 2024 high above $1.3430 in late September but has since given back 3.5% of its valuation to the stronger greenback. Across the board, the EUR/USD floated under $1.08 early Friday and the USD/JPY fell under 152.50.