Sterling Strengthens, BoE Cut Expectations Fade
The pound strengthened moderately against the US dollar on Tuesday (February 3), keeping GBP/USD in the 1.368–1.369 range ahead of this week's Bank of England interest rate meeting. This movement positions the pound as one of the stronger players in the G10 group as markets begin to discount the scenario of an aggressive rate cut.
Key support comes from the latest UK data, which is considered quite resilient, leading market participants to reduce expectations of rapid easing. Several analysts—including a note from Scotiabank—suggest that the market is now likely pricing in the chance of a 25 bps cut around June, rather than any time soon.
The next Bank of England meeting is scheduled for Thursday, February 5, 2026, and investors currently see little chance of a cut at this meeting. Some markets even consider the chances of more than one cut this year to be less than they had anticipated a few weeks ago.
On the other hand, external factors remain a balancing factor: strong US data and shifting US interest rate expectations could prevent the USD from weakening too much—meaning that GBP/USD gains could still "hit a wall" if the dollar is sought again. Therefore, the pound's movements ahead of the BoE's decision will be highly sensitive to the tone of the central bank's statement and market readings regarding when the first rate cut is truly realistic.
Source: Newsmaker.id
