Sterling lost ground late in the week after disappointing UK figures pushed GBP/USD down to new daily lows near 1.3360. The move reflects a shift in sentiment as traders turn their focus to the Bank of England meeting scheduled for December 18, while also keeping an eye on the US Federal Reserve decision coming mid-week.

Markets widely expect the Fed to cut rates by 25 basis points on Wednesday, marking its third reduction of the year and lowering the target range to 3.50% to 3.75%. Even with the cut, investors believe policymakers will maintain a firm tone. The idea of a “hawkish cut” has gained traction, with expectations that the Fed will emphasize caution heading into 2026. Lingering inflation and a job market that remains steady could encourage the central bank to hint at slowing the pace of future easing. Any such signal may support the Dollar and limit upside attempts in GBP/USD.

The British Pound is also under pressure from domestic concerns. The latest UK budget raised the outlook for higher taxation, adding strain to consumer and business sentiment. Softer inflation readings and signs of cooling in the labor market have increased speculation that the BoE is preparing to adjust policy again. Current pricing shows nearly an 88% chance of a 25-basis-point cut at the December meeting, supported by the view that inflation pressures have eased meaningfully over recent months.

Together, these factors leave GBP/USD facing mixed dynamics. A cautious Fed message could strengthen the Dollar, while expectations of further BoE easing may continue weighing on Sterling. Traders will be watching upcoming commentary closely to gauge how both central banks plan to navigate the months ahead.

Trade Idea:
Sell rallies below 1.3400 with a target near 1.3310. Stop placement recommended above 1.3440 to manage risk.