The GBP/USD exchange rate now trades within a very tight range, fluctuating near 1.3370 on Thursday. With the pace of the move underpinned by a stunning overnight recovery from the 1.3310 region. The pair have struggled to follow through on this momentum. Uncertainty is keeping traders on the sidelines. They are keeping powder dry on the sidelines awaiting important announcements from the Bank of England (BoE) and next US consumer inflation data.
Britain’s unemployment rate has recently increased to its highest level since early 2021, presenting potential implications for the BoE’s monetary policy. With unemployment increasing, this will likely provide the central bank more room to further loosen monetary policy. This adjustment has the potential to significantly undermine the value of the British Pound (GBP). Softer UK consumer inflation figures are front and centre at the moment in weighing down the currency. This further complicates the bearish outlook for the GBP/USD currency pair.
In fact, recent reports have shown that the core UK Consumer Price Index (CPI) surged 3.2% year-over-year last month. This print marks a significant decrease against consensus expectations and against October’s print of 3.4%. New trends show that the economic horizon is darkening. Consequently, traders are now even wagering on more easing measures from the BoE.
Spot prices for GBP/USD are back below $1.24, having fallen over 0.10% today. This drop-off illustrates that traders are feeling timid in the present state of the market. The upcoming central bank event risk and US consumer inflation data release scheduled for December 18, 2025, loom large over market activity. The consensus estimate for this release is 3.75%, a decrease from the last figure of 4%. The lack of consistency in the timing of these types of releases only serves to increase the market’s already significant level of uncertainty.
Traders are trying to read between the lines on these macro feathers. As you might have guessed, the British Pound is the primary force behind affecting how the GBP/USD pair will move. Increasing joblessness and a cooling inflation picture are climbing to the top. All three of these factors would seem to move the BoE in a more dovish direction.