GBP/USD Forecast: Pound Sterling Calm before the BoE Storm

Modified: Wednesday, 5 November 2025 22:45 BST - Written by Frank Davies

STORY LINK GBP/USD Forecast: Pound Sterling Calm before the BoE Storm

The Pound-to-Dollar exchange rate (GBP/USD) traded in a narrow range on Wednesday, as markets digested mixed signals from the latest US employment data and looked ahead to the Bank of England’s policy announcement.

At the time of writing, GBP/USD was trading around $1.3069, almost unchanged from the start of Tuesday’s session.

The US Dollar (USD) lacked a clear trajectory on Wednesday, despite a mildly upbeat ADP employment print.

The report indicated that 42,000 new private sector roles were created in October, swinging back from September’s 29,000 decline and surpassing forecasts of 25,000.

While the figures signalled a partial recovery in hiring, economists noted that gains were uneven across sectors, underscoring lingering weakness in the US labour market.

As a result, investors were quick to revive expectations that the Federal Reserve could favour another rate cut in December, keeping USD upside firmly in check.

The Pound (GBP) gained some light support in early trade following a stronger-than-initially-reported UK services PMI.

October’s final reading was upgraded from 51.1 to 52.3, reflecting improving domestic demand within the UK’s dominant services industry.

Even so, optimism remained tempered as businesses highlighted lingering caution ahead of Chancellor Rachel Reeves’s autumn budget, which continues to cast uncertainty over the outlook for growth.

Nevertheless, Sterling’s advance was limited as investors remained cautious ahead of the Bank of England's (BoE) interest rate announcement on Thursday.

GBP/USD Forecasts: BoE Guidance to Steer Sterling Direction

Looking ahead, the BoE’s policy announcement on Thursday is expected to set the tone for GBP/USD movement through the remainder of the week.

While a rate cut this month cannot be ruled out, most analysts expect the central bank to keep borrowing costs unchanged. Instead, attention will turn to the BoE’s forward guidance, with investors seeking clues on whether policymakers may opt for one final cut before year-end.

Any hint of a dovish outlook could weigh on Sterling, while a more cautious tone may help the Pound regain some lost ground.

Meanwhile, the US Dollar could find near-term support if risk appetite deteriorates, with mounting fears of a correction in equity markets potentially driving investors to favour the safe-haven currency.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Dollar Forecasts