British pound crashed ahead of the Bank of England rate decision

The GBP/USD began the week with modest gains; however, these were quickly reversed due to the US dollar’s strength, which exerted downward pressure on the exchange rate. Additional factors contributing to the decline include political uncertainty and technical selling above the 1.3450 level.

Bank of England Expected to Hold Rates

The Bank of England is widely anticipated to maintain the base rate at 3.75% for a fourth consecutive meeting. Nonetheless, investors are closely monitoring for any indications of a divided vote or signals regarding the future trajectory of interest rates. Concurrently, market participants remain focused on Thursday’s Makerfield by-election results, which could have significant implications for Prime Minister Keir Starmer’s leadership. The election outcome is expected to be released late Thursday evening or early Friday morning.

Looking ahead, both the upcoming rate decision and election results are expected to introduce volatility into the GBP/USD pair, with potential broader market repercussions. If the Bank of England surprises markets with a dovish stance, this would likely reinforce the current downward trend.

GBPUSD Technical Analysis

The GBP/USD recently fell below the 1.3300 support level, which had previously provided strong support. At present, the pair trades near 1.3230. If selling pressure persists, the next key support levels to monitor are 1.3210 and 1.3200. A breach below these levels could open the path to a sharper decline toward 1.3160–1.3150. On the upside, immediate resistance is observed at 1.3260, followed by stronger resistance between 1.3300 and 1.3330.

Bottom Line: The key demand zone to watch is near 1.3150, where potential reversal signals may emerge. Price action around this level will be critical in setting the tone for the coming days, as a breakdown below 1.3150 could trigger a more pronounced move downward.

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