Pound trades near 1.34 as divided BoE votes on 5 November

• GBP/USD approaches 1.3400 as recovery extends into a second session.
• Following the ECB decision, the Dollar weakens, with the Pound outperforming the Euro.
• After a 6-3 vote to leave rates unchanged, the BoE announces its next decision on Thursday, 5 November.

The European Central Bank's (ECB) decision to leave rates unchanged sent the Euro to a fresh low, a move the Pound did not follow. As a result, GBP/USD has gained more than EUR/USD. Having reached its session low just below 1.3300 before the ECB announcement, GBP/USD has advanced since ECB President Lagarde's press conference got under way. The pair now trades close to its session high, just below 1.3400.

At 3.75%, the UK's Bank Rate has remained unchanged since December 2025, although three of the Bank of England's (BoE) nine policymakers backed an increase in September. By contrast, the Fed, the ECB and the Bank of Japan have each increased rates in 2026. With Bank Rate matching the lower bound of the Fed's 3.75%-4.00% range, the interest rate differential for GBP/USD is no more than a quarter-point.

October's Citi and YouGov survey showed that Britons expected inflation over the coming year to be 4.2%, compared with 4.5% previously. GBP/USD showed little response. Longer-term inflation expectations declined to 4.0%, matching the level Bank Rate would reach following a quarter-point increase on 5 November.

BoE decision leads the calendar

At 12:00 GMT on 5 November, the BoE will release its rate decision alongside the quarterly Monetary Policy Report, followed by remarks from BoE Governor Bailey at 12:30 GMT. A further two votes in favour of an increase would secure a majority, changing the UK side of GBP/USD's interest rate differential for the first time since December 2025.

Friday brings the US Chicago Purchasing Managers Index (PMI) at 13:45 GMT, with a reading of 56.1 forecast against 58.8 previously. September's job openings figures follow on 3 November at 15:00 GMT, after a previous reading of 7.079 million. Both releases feed into the US side of the interest rate differential.

GBP/USD regains its 50-day EMA

Back above its 50-day Exponential Moving Average (EMA), which sits just over 1.3350, GBP/USD remains below the 200-day average. Around three-quarters of the decline from the 22 October high has been retraced during the two-day advance. Measured against the fall from August's high to the 14 October low, the pair has recovered slightly less than half.

GBP/USD recovery on the daily chart