Bank of England hikes to 4%, sterling unable to sustain rise

The three major currency pairs—EURUSD, USDJPY and GBPUSD—are examined from a technical perspective. For each pair, the bias, risk-defining levels, and targets that would shift control to buyers or sellers are outlined.

As expected, the Bank of England raised Bank Rate by 25 basis points to 4.00%. All nine policymakers supported a hike, compared to seven expected, but the formal vote on the quarter-point move was 8–1. Catherine Mann favored a larger, 50-basis-point increase to 4.25%. GBPUSD traded as high as 1.3506 during the session and has now settled at 1.3467, little changed on the day. Bank of England decision and minutes

Bank of England Governor Andrew Bailey said today’s quarter-point hike to 4% was justified by inflation pressures already in the pipeline, even after the latest drop in oil prices. He said the hike does not necessarily mark the start of a series, but the case for another 25 basis points could be fairly strong if the US–Iran conflict remains unresolved. Further progress toward a resolution could reduce the need for additional hikes and allow inflation to peak somewhat below 5%. Bailey added that the UK economy has been more resilient than expected, though the strength has been concentrated, with AI investment accounting for about a fifth of GDP growth. Private-sector wage growth is expected to change little in the coming months, while food and core goods inflation are likely to pick up. How long the conflict lasts and how energy costs feed through to broader inflation will help determine the BOE’s next move.

UK inflation rose to 3.5% in September, and the BOE expects it to approach 5% by mid-2027 as higher energy prices feed into household and business bills. Stronger-than-expected activity helped make the case for today’s hike. For the next decision, attention will be on whether those higher costs start showing up in wages and a wider range of prices. The BOE still sees limited evidence of that spillover. This morning’s UK construction PMI, meanwhile, fell to 43.6 from 46.1, below the 46.4 forecast.

The US dollar is mixed and moves are small.

The dollar’s largest gain is against the Swiss franc, with USDCHF up 0.10%. It is down the most against the Canadian dollar and euro, both by about 0.06%. The dollar is also modestly lower against the New Zealand dollar and yen, and slightly higher against the pound and Australian dollar. With changes this small, the focus is on the edges of the session ranges for a better read on who is taking control.

SNB Chairman Martin Schlegel reiterated that the policy rate remains the central bank’s main tool, with foreign exchange intervention available when needed. He noted that Switzerland is highly exposed to external economic shocks and that the Swiss franc has relatively strong safe-haven characteristics compared with other currencies. Schlegel said the SNB’s monetary policy strategy works across a broad range of conditions and that the central bank has fulfilled its mandate of maintaining price stability over the medium term.

How much of a normal day’s range has traded?

The following ranges use the session highs and lows and the 22-day average ranges.

• EURUSD — 1.1217 to 1.1268, 51 pips or 80% of average.

• USDJPY — 157.79 to 158.44, 65 pips or 93% of average.

• GBPUSD — 1.3449 to 1.3506, 57 pips or 81% of average.

• USDCHF — 0.8136 to 0.8185, 49 pips or 92% of average.

• USDCAD — 1.3943 to 1.3983, 40 pips or 63% of average.

• AUDUSD — 0.7002 to 0.7024, 22 pips or 50% of averages.

• NZDUSD — 0.5617 to 0.5657, 40 pips or 91% of average.

AUDUSD has the most room relative to its recent averages, followde by USDCAD. USDJPY, USDCHF and NZDUSD have already covered more than 90% of theirs. These averages are used for context. A break that holds beyond a session high or low can still extend the range.

U.S. futures are mixed as chip stocks lag.

Nasdaq 100 futures are lagging as chip and data-center shares come under pressure. Qualcomm was down about 10% in early premarket trading after smartphone-chip sales fell short of estimates. The S&P 500 is little changed in futures after Wednesday’s post-election rally. The Dow is higher as the market traders rotate out of tech.

• Dow futures +308 points

• S&P 500 futures +9.5 points

• Nasdaq 100 futures −260 points

European shares are higher across the major indices:

German DAX +0.47%

• Frech CAC 40 +0.79%

• UK FTSE 100 +0.62%

• Spanish IBEX 35 +1.38%

• Italian FTSE MIB +0.22%

Short-term Treasury yields rise. Oil and gold are higher.

The 2-year yield is up nearly 3 basis points while the 10-year is effectively flat. The front end will be watched for the initial reaction to claims and unit labor costs.

• 2-year yield at 4.608%, up 2.69 basis points

• 5-year yield at 4.700%, up 1.20 basis points

• 10-year yield at 4.892%, up 0.01 basis point

• 30-year yield at 5.271%, down 0.91 basis point

U.S. crude is up $1.41, or 1.60%, at $89.53, near the session high of $89.84 after trading as low as $86.65.

Spot gold is up $64.11, or 1.58%, at $4,124.47. The price extended above the topside trend line near $4083 without much in the way of resistance, rising to a high of $4146. That was near swing highs from October 19-October ̈21 before the resumption of the move down.

Silver is up 0.63% at $52.58, copper is down 0.47% at $6.3990, and Bitcoin is down and back below $80K. The price snapshot is down -0.68% at $79,883.

What’s ahead in North America

Challenger job cuts were down 71.3% year over year, following a 19.9% decline in the prior report. Weekly claims are next, ahead of Friday’s jobs report. Productivity and unit labor costs also come out at 8:30 AM ET. If productivity picks up and unit labor costs slow as expected, it would point to less labor-cost pressure per unit of output. InvestingLive’s week-ahead preview

8:30 AM ET – U.S. initial jobless claims – Forecast 197K – Previous 194K

• 8:30 AM ET – U.S. preliminary nonfarm productivity, q/a – Forecast 2.8% – Previous 1.4%

• 8:30 AM ET – U.S. preliminary unit labor costs, q/a – Forecast 0.3% – Previous 1.2%

• 8:50 AM ET – Cleveland Fed President Beth Hammack speaks

• 9:10 AM ET – Richmond Fed President Thomas Barkin speaks

• 10:30 AM ET – Bank of Canada Governor Tiff Macklem speaks

• 12:45 PM ET – Bundesbank President Joachim Nagel speaks

• 1:00 PM ET – ECB President Christine Lagarde speaks

• 4:00 PM ET – Canada’s annual budget release