The British pound has recently been facing significant difficulties, largely tied to problems with approving the new UK budget for next year. As a reminder, a similar issue has led to the ongoing U.S. government shutdown. However, one factor that could limit the downward potential of the GBP/USD pair is the expected Bank of England decision this Thursday — the Bank is anticipated to refrain from cutting interest rates, further slowing the pace of its once-per-quarter policy easing, which it has maintained for over a year.

A more decisive pause in monetary easing could cool the enthusiasm of pound bears somewhat. The market is already pricing in a degree of uncertainty about the Bank of England's future policy, and any confirmation of its commitment to fighting inflation could trigger a short-term strengthening of the British currency.

However, even in this case, the underlying problems of the British economy will not disappear. High inflation and ongoing budget uncertainty will continue to pressure the pound in the medium term. Any rally is likely to be just a short-term correction before the decline resumes.

Investors and economists expect the Bank of England's Monetary Policy Committee to keep the rate unchanged at 4%, as inflation in the UK remains almost twice the 2% target, while the autumn budget will not be presented until November 26.

A vote to maintain borrowing costs will end the practice of cutting rates at every second meeting since August 2024 and will contrast with the U.S. Federal Reserve, which once again eased policy on Wednesday.

However, this pause may be short-lived, as traders have increased bets on a rate cut in December following weaker-than-expected inflation, employment, and output data. While investors still see only a small chance of a cut this Thursday, the probability of a rate reduction on December 18 has risen to almost 60%.

Governor Andrew Bailey recently warned that the exact timing of the next rate cut remains uncertain, partly because Thursday's meeting will take place just three weeks before Chancellor Rachel Reeves presents her crucial budget.

Reeves has been accused of fueling food price inflation after increasing employer payroll taxes in April of this year. However, another round of significant tax hikes — this time potentially targeting households — could further weaken the already struggling economy.

Current Technical Picture for GBP/USD

For pound buyers, the key is to break above the nearest resistance at 1.3160. Only then will it be possible to target 1.3190, although breaking higher than this will be quite challenging. The final bullish target is the 1.3220 level. In case of a decline, bears will attempt to regain control over 1.3130. If successful, a break below this range would deal a serious blow to the bulls, pushing GBP/USD down to the 1.3095 low, with a further potential move toward 1.3060.

Current Technical Picture for EUR/USD

At the moment, euro buyers need to focus on reclaiming the 1.1550 level. Only then will it be possible to aim for a test of 1.1580. From there, the pair could rise to 1.1610, but doing so without major market support will be difficult. The final target would be the 1.1640 high. If the trading instrument declines, only around the 1.1520 level do I expect major buyers to become active. If no one steps in there, it would be better to wait for an update of the 1.1490 low, or to consider opening long positions from 1.1460.