• GBP/USD recovers toward 1.2650 following Wednesday’s sharp decline.
• The hawkish twist in the Fed’s dot plot boosted the US Dollar in the American session.
• Bank of England is forecast to leave the bank rate unchanged at 4.75%.

After suffering heavy losses in the American session on Wednesday, GBP/USD stages a decisive rebound early Thursday as investors reposition themselves ahead of the Bank of England’s (BoE) monetary policy announcements.

British Pound PRICE This week

The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the weakest against the US Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.78%	-0.25%	2.13%	1.12%	1.94%	2.00%	0.39%
EUR	-0.78%		-0.98%	1.44%	0.40%	1.32%	1.28%	-0.33%
GBP	0.25%	0.98%		2.32%	1.38%	2.32%	2.26%	0.65%
JPY	-2.13%	-1.44%	-2.32%		-1.01%	-0.19%	-0.12%	-1.63%
CAD	-1.12%	-0.40%	-1.38%	1.01%		0.87%	0.87%	-0.73%
AUD	-1.94%	-1.32%	-2.32%	0.19%	-0.87%		-0.04%	-1.63%
NZD	-2.00%	-1.28%	-2.26%	0.12%	-0.87%	0.04%		-1.60%
CHF	-0.39%	0.33%	-0.65%	1.63%	0.73%	1.63%	1.60%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

The Federal Reserve (Fed) lowered the policy rate by 25 basis points after the December meeting, as expected. The revised Summary of Economic Projections (SEP), also known as the dot plot, showed that Fed officials’ median view of the policy rate at end-2025 stood at 3.9%, up from 3.4% in September’s SEP. According to the projections, one of 19 officials see no cuts in 2025, three see one cut, 10 see two cuts, three see three cuts, one sees four cuts and one sees five cuts.

Fed Chairman Jerome Powell explained in the post-meeting press conference that stronger economic growth and lower unemployment would put them on a slower rate-cut path, adding that they can be cautious going forward. US Treasury bond yields surged higher in the Fed aftermath and boosted the US Dollar (USD), forcing GBP/USD to decline sharply.

The improving risk mood limits the USD’s gains and helps GBP/USD rebound in the European session on Thursday.

The BoE is widely expected to leave the policy rate unchanged at 4.75%. Since there will not be a press conference, the vote split could influence Pound Sterling’s valuation. If the decision to maintain status quo turns out to be a close call, with several policymakers voting in favor of a 25 bps rate cut, GBP/USD could turn south once again.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart rises toward 50, reflecting sellers’ hesitancy. On the upside, 1.2700-1.2710 (100-period Simple Moving Average (SMA), Fibonacci 38.2% retracement of the latest downtrend, 200-period SMA) aligns as immediate resistance ahead of 1.2750 (Fibonacci 50% retracement) and 1.2800 (static level).

Looking south, first support could be spotted at 1.2620 (Fibonacci 23.6% retracement) before 1.2570 (static level) and 1.2500 (round level, static level).