The GBP/USD currency pair experienced a notable decline on Thursday, dipping below the significant 1.2400 threshold following the Bank of England’s (BoE) decision to cut interest rates once again. The reduction, amounting to 25 basis points, while indicative of the BoE’s response to economic conditions, was accompanied by a surprisingly hawkish tone that dampened expectations for additional cuts in the near future. Market reactions suggest that participants are now pricing in just one or two more rate reductions over the course of the year.
The unanimous vote among the nine members of the BoE’s Monetary Policy Committee for the rate cut reflects a shared concern regarding economic growth. However, the split in their votes — seven members favoring a 25 basis point cut and two advocating for a more aggressive 50 basis point cut — highlights diverging opinions on how to approach economic recovery. Despite the urgency expressed by some policymakers, market forecasts point to only moderate rate adjustments throughout 2025.
Looking ahead, attention is now turning to the upcoming Nonfarm Payrolls (NFP) report due on Friday, which is expected to show a slowdown in job creation, with projections indicating only 170,000 new positions added in January compared to a stronger 256,000 in December. Investors will be particularly attentive to any revisions in previous data, as enhanced adjustments in earlier reports have sparked concerns among market watchers that strong employment figures might stall hopes for further monetary easing from the Federal Reserve.
Technically, the GBP/USD faced resistance near the 50-day Exponential Moving Average, reaching a low around 1.2350 before settling just below 1.2450. With the current bearish trend, there is a possibility of continuing downward momentum as buyers struggle to maintain their position in the market.
