GBP Outlook: Central Bank Decision Imminent, Bearish Pressure May Persist

**Central Bank Policy Shift Sparks Market Speculation**

The GBP/USD has recently stabilized after a period of adjustment. In early November, influenced by expectations of UK fiscal policy, the pound briefly fell to 1.3010, hitting a nearly seven-month low. Meanwhile, the EUR/GBP reached a more than two-year high, with market sentiment clearly bearish on the pound. By mid-November, the pound showed signs of a rebound, but investors' focus has shifted to the upcoming UK central bank interest rate decision.

**Market Divergence: Rate Cut Expectations Rise**

There is a clear divergence in market views regarding the Bank of England's policy stance this week. The traditional view is that the central bank will maintain the benchmark interest rate at 4% for the second consecutive time. However, major institutions including Barclays, Goldman Sachs, and Nomura Securities expect that, due to recent weak economic data, the bank may unexpectedly cut rates to 3.75%. Derivatives market data further confirms this split—LSEG statistics show a roughly 35% chance of a rate cut this week, with the implied probability of a December cut rising to nearly 70%, indicating the market is preparing for subsequent easing measures.

**GBP Faces Dual Pressures**

ANZ Bank analysts note that even if the central bank chooses to hold steady this month, its policy tone may still lean dovish, which could significantly constrain the GBP exchange rate. If GBP/USD breaks below the 1.30 level, technical analysis suggests it could further decline to 1.2712, returning to April lows. TD Securities shares a similar view, believing that regardless of the central bank's actions this time, the pound will struggle to escape downside pressure. The EUR/GBP still has room to rise further, while GBP/USD needs to watch out for technical breakdown risks.

**Fiscal and Monetary Policy Interplay**

The UK budget on November 26 is expected to introduce tax measures to meet fiscal rules, laying the groundwork for future easing by the central bank. Mitsubishi UFJ analysts believe that if the bank begins a rate-cut cycle in December, the GBP will face further downside. According to their forecast, EUR/GBP could rise to 0.8900 in Q1 2026 and further to 0.9000 in Q2, indicating significant potential for GBP depreciation.

Investors should closely monitor policy announcements, subsequent central bank officials' statements, and the details of the budget plan, as these will be key factors in determining GBP's outlook.