Today, Thursday, GBP/USD is under selling pressure for the second consecutive day. The decline in prices is driven by U.S. dollar strength, which has pushed spot prices below the psychological 1.3600 level, or to a two-week low, ahead of the Bank of England's monetary policy decision.

Against the backdrop of rising inflation, which remained above the 2% target in December, the market expects the Bank of England to keep its benchmark interest rate unchanged at 3.75%. However, market participants continue to price in the risk of lower borrowing costs in 2026 amid signs of cooling in the labor market.

The UK unemployment rate is holding at a four-year high of 5.1% for the three months to November, employment fell by 43,000 in December, and slower wage growth reinforces expectations of further easing by the Bank of England. The key focus will be on the outcome of the Monetary Policy Committee (MPC) vote and the press conference featuring Bank of England Governor Andrew Bailey, whose comments could significantly increase volatility in the British pound and set the tone for GBP/USD.

However, ahead of the key Bank of England event, pound bulls are refraining from aggressive buying amid the recovery in the U.S. dollar, fueled by Donald Trump's appointment of Kevin Warsh as Chairman of the Federal Reserve and hawkish comments from Lisa Cook about the risks of accelerating inflation, which boosted the dollar. That said, the dollar's upside potential is limited by expectations of two Fed rate cuts in 2026, reinforced by a weak January Automatic Data Processing (ADP) report—only 22,000 new private-sector jobs versus a consensus forecast of 48,000 and a previously revised 37,000. Additionally, Trump's statements expressing opposition to rate hikes and confidence in rate cuts may restrain the dollar rally and support the GBP/USD pair.

Today, in the search for better trading opportunities, attention should be paid not only to the Bank of England's rate decision but also to U.S. data, including JOLTS job openings and initial jobless claims. However, the mixed fundamental backdrop calls for caution before taking aggressive positions.

From a technical perspective, if prices fall below the 20-day SMA, bears would take control. For now, however, GBP/USD has shown resilience below the 20-day SMA, even holding the psychological 1.3600 level. If prices rise above the 9-day EMA, currently around 1.3660, GBP/USD could also have a chance to break above the psychological 1.3700 level. Oscillators on the daily chart remain positive, so bulls have not yet given up.