UK CPI on Wednesday the key test for a Pound Sterling under pressure

💡 DMK Insight

The BoE’s decision to keep rates at 3.75% signals a shift in monetary policy sentiment that traders need to watch closely. With a split vote of 5-to-4, the close call indicates growing divisions within the MPC, hinting at potential future rate cuts. This dovish stance could lead to increased volatility in GBP pairs, particularly against the USD and EUR. If the market begins to price in rate cuts, we might see GBP/USD testing key support levels, especially if it drops below recent lows. Traders should also keep an eye on inflation data and economic indicators that could influence the BoE’s next moves. The real story here is how this dovish sentiment could ripple through the broader market, affecting not just forex but also equities and commodities, as lower rates typically boost risk appetite. Watch for any shifts in market sentiment around the next BoE meeting, as well as key economic releases that could sway the committee’s decision-making. The immediate focus should be on how GBP reacts to this news, especially if it approaches critical support levels in the coming weeks.