GBP/USD approaches 1.34 as UK political stability and economic data influence the exchange rate.

The Bank of England’s recent 8–1 hold at a 3.75% Bank Rate and a dovish policy tone have weighed on sterling. With GBP/USD near 1.3530, markets are now pricing earlier BoE easing and awaiting US Nonfarm Payrolls—leaving the pound vulnerable to moves in the dollar and domestic political headlines.

Last week’s stronger-than-expected UK GDP and industrial prints pushed the pound higher, while a hotter-than-forecast US NFP reading and a firmer dollar trimmed gains. Elevated implied volatility and clear technical ranges present actionable levels for traders.

Last week sterling moved on clear policy and supply shocks: BoE Governor Andrew Bailey’s dovish remarks eroded near-term rate-hike expectations, while the Bank of England cited a Middle East-driven energy supply shock that pushed yields sharply higher. Combined with MUFG’s near-term GBP/USD forecast, these concrete developments produced mixed but tradeable implications for GBP crosses.

This article summarizes last week’s concrete developments driving the British pound: a USD rally pushed GBP/USD to its weakest since November, while EUR/GBP tightened after renewed Eurozone inflation concerns. We unpack the price moves, central bank influences, and practical trading implications.

Sterling softened as UK CPI fell to 3.0%, prompting markets to price a high probability of a BoE rate cut. Gilt yields, oil-driven inflation risks and technical GBP/USD levels shaped trading, with the pair oscillating around 1.33–1.34 ahead of key central-bank moves.