Cable's Next Move Hinges on BoE-Fed Policy Divergence

Policy divergence between the Bank of England and the Federal Reserve continues to sit at the heart of the GBP/USD narrative, with relative rate expectations dictating flow direction more than domestic UK headlines alone.

A hawkish Fed, supported by firm US inflation readings, tends to widen yield differentials against sterling, pressuring cable lower even when UK fundamentals are stable.

Until there is a clear signal of the BoE matching or outpacing Fed hawkishness, GBP/USD is likely to remain sensitive to every incremental shift in US rate-cut or rate-hold expectations.