- GBP/USD trades flat on Tuesday, holding within Monday’s range near 1.3520.
- BoE Governor Bailey sees rates moving lower but warns of increased uncertainty.
- A split within the MPC signals a cautious, data-driven rate path ahead.
The British Pound (GBP) is trading flat against the US Dollar (USD) on Tuesday, edging slightly lower from its intraday high while remaining within Monday’s range. The GBP/USD pair holds steady as the US Dollar eases slightly from a six-week low, with market participants eyeing upcoming US economic data and digesting fresh commentary from Bank of England (BoE) officials following Tuesday’s Monetary Policy Report Hearings.
At the time of writing, the GBP/USD pair is trading around 1.3521 during the late American session, paring some of Monday’s gains amid a lack of clear directional drivers. Meanwhile, the US Dollar Index (DXY) is staging a mild recovery after Monday’s drop to a six-week low, supported by upbeat JOLTS Job Openings data. The index has climbed back above the 99.00 mark, hovering near Monday’s high and last seen trading around 99.23.
Earlier on Tuesday, Bank of England officials appeared before Parliament to offer fresh insight into the central bank’s policy outlook during the Monetary Policy Report Hearings. BoE Governor Andrew Bailey reiterated that interest rates are likely to head lower, but stressed that the path ahead is increasingly uncertain. “I think the path remains downwards, but how far and how quickly is now shrouded in a lot more uncertainty,” Bailey noted, citing heightened global trade tensions and their potential to disrupt investment and economic growth.
Deputy Governor Sarah Breeden, a centrist on the Monetary Policy Committee (MPC), told lawmakers that she supported the May rate cut even in the absence of external trade shocks, reinforcing the BoE’s bias toward easing. However, divisions within the MPC remain clear—Swati Dhingra pushed for a deeper cut, warning of the drag from tight policy, while Catherine Mann, an external member of the MPC who opposed the May rate cut, said the labor market appeared to be cooling less than she had anticipated back in February, when she supported a more aggressive half-point reduction.
Overall, the BoE hearings revealed that while interest rates are likely to decrease, there is no clear consensus on how quickly this should occur. Some members are concerned that inflation may persist, while others believe that keeping rates too high for too long could harm the economy. With opinions clearly split, the central bank is likely to take a cautious, data-driven approach in the months ahead.
