GBP/USD and GBP/EUR market update

Post-NFP Dollar Resilience Caps GBP and EUR; US CPI on Tuesday and UK GDP on Thursday Frame the Week, Monday, 09 November 2026

GBP/USD: 1.3411 | GBP/EUR: 1.1987 | EUR/USD: 1.1188

The BoE's hawkish 8-1 hike to 4.00% on 5 November has been fully absorbed by markets, with GBP/USD recovering modestly from Friday's close near 1.3348 to trade around 1.3385 in early European hours, according to FXStreet. EUR/USD has also edged higher, trading in positive territory around 1.1160 during the early European session, though both pairs remain capped by the post-NFP dollar bid. The week's dominant event risks are Tuesday's US CPI for October and Thursday's ONS Q3 GDP release, with BoE Governor Bailey speaking in Zurich this evening at 5.25pm GMT.

Overnight & Market Tone:

GBP/USD gathered strength to near 1.3385 in the early European session, with residual support from the BoE's hawkish hike providing a modest bid for sterling. GBP/EUR traded sideways last week, hovering just below its recent 18-month high, with the cross quoted at approximately 1.1981 at the time of writing. FTSE 100 futures pointed to a marginally firmer open, up around 0.1%, with the index last quoted near 10,718, though the broader tone remains cautious following last week's AI-driven equity rout. The 10-year gilt yield is trading around 5.15% (Bloomberg, 6 November), reflecting the post-hike repricing of the BoE path, while the US 10-year Treasury yield rose to 4.87% on 6 November, lifted by the stronger-than-expected payrolls data. Brent crude edged higher, with WTI rising to $91.32 on 9 November, offering modest support to energy-linked inflation expectations on both sides of the Atlantic.

UK Data & Bank of England:

The BoE's decision to raise Bank Rate by 25bp to 4.00% on 5 November in an 8-1 vote is now the established policy baseline. Governor Bailey stated at the post-decision press conference that he does not think the MPC moved too late, and explicitly refused to endorse a "two and done" outlook for rates. He added that "unless there is progress towards resolving conflict, further increase in bank rate may be warranted," keeping December live. Bailey speaks again this evening at the Swiss Institute of International Studies in Zurich at 5.25pm GMT; any elaboration on the inflation or rate path will be closely watched by sterling markets. UK GDP is due on 12 November, the labour market report on 17 November, and October CPI on 18 November, all at 07.00am UK time. Consensus for Q3 GDP stands at 0.7% quarter-on-quarter (previous: 0.5%), with September monthly GDP expected flat at 0.0%. The GDP data arrives a week after the BoE's hike and its warning on inflation, so a weak print would raise questions about stagflation, while a strong one would support further tightening bets and sterling. The next MPC decision is on 17 December; OIS pricing as of 6 November implies a 79% probability of a further 25bp hike to 2.75% - note that figure relates to the ECB; for the BoE, SONIA forwards continue to price a meaningful probability of a December move to 4.25%, consistent with Bailey's refusal to rule out further action. October CPI is due on 18 November, and a reading above September's 3.5% would materially reinforce the case for a December BoE hike.

European Backdrop & EUR/USD:

The ECB left its benchmark deposit facility rate steady at 2.50% at its October 2026 meeting, in line with market expectations, following 25bp hikes in both September and June. The next ECB Governing Council decision is on 17 December. OIS pricing as of 6 November implies a 79% probability of a 25bp hike to 2.75% at that meeting. The ECB's own Survey of Monetary Analysts points to a 2.75% deposit rate in December, with the median analyst forecast placing the rate there by year-end. Goldman Sachs Research forecasts one more hike in December, taking the deposit rate to 2.75%, though its economists think it unlikely the ECB will keep rates well above 3% as currently priced by some market participants. ECB Chief Economist Philip Lane is scheduled to speak today at 10.30am CET (09.30am London), and his remarks on the inflation and rate path will be the key European event of the morning session. ECB's Dolenc has already noted that inflation risks are skewed to the upside on oil, gas, food and strong growth, reinforcing the hawkish tilt in Governing Council communication. ING has argued that, barring a soft US jobs report, EUR/USD should consolidate not far from 1.12, with attention also on Lane's remarks; separately, ECB President Lagarde's comments that US tariffs are unlikely to be revisited quickly highlight lingering external risks that could sustain euro-area price pressures. For EUR/USD specifically, the pair is trading around 1.1160-1.1188 at the London open, well below last week's high of 1.1266 but above the week's low of 1.1132 (Forexuro). From Monday's high near 1.1266 down to Friday's close at 1.1137, the euro gave back more than a full figure as the dollar index rose to 102.32; the range to watch this week is 1.1070 to 1.1204. The ECB-Fed rate differential is the key structural driver: with both central banks pricing one more hike in December, the pair is likely to remain anchored near current levels unless Tuesday's US CPI materially shifts the relative tightening calculus. Option expiries at the New York cut today include EUR/USD at 1.1190 (EUR 1.71bn) and 1.1300 (EUR 1.80bn), which may act as gravitational anchors through the afternoon session.

US Backdrop:

According to the CME FedWatch tool, market-implied probabilities for a 25bp Fed hike at the December FOMC meeting have surged past 78%, underpinned by October nonfarm payrolls of 165,000, substantially outperforming the 65,000 consensus, while the unemployment rate dipped to 4.1%. Commerzbank Research argues that strong October payrolls and still-elevated inflation back expectations for another Fed rate increase in December, noting that most officials already projected at least one more hike this year and that recent data are unlikely to alter that stance. Tuesday's US CPI for October (consensus: headline 3.7% year-on-year, core 2.5%) is the next decisive data point; a hot print would further entrench December hike pricing and extend the dollar's post-NFP recovery, while a soft reading could partially reverse it.

Technical Picture:

GBP/USD: Resistance 1.3411 (current spot), 1.3463 (Friday session high area), 1.3499 (last week's high). Support 1.3343 (last week's low/Friday close area), 1.3300 (round number).
GBP/EUR: Resistance 1.1987 (current spot), 1.2000 (round number/18-month high area), 1.2020. Support 1.1950, 1.1920 (prior consolidation zone).
EUR/USD: Resistance 1.1190 (option expiry/near-term cap), 1.1234 (Friday session high), 1.1266 (last week's high). Support 1.1132 (last week's low), 1.1100 (round number).
Outlook: The upside scenario for GBP/USD requires soft US CPI and firm UK GDP, which together could see the pair retest 1.3463 and the weekly high at 1.3499; the downside scenario, hot US inflation combined with soft UK growth, would point toward a break of 1.3343 and open 1.3300 as the next level. EUR/USD faces a similar binary around Tuesday's CPI, with the large option expiries at 1.1190 and 1.1300 likely to contain intraday moves today.

Today's Calendar:

Governor Bailey's speech in Zurich this evening is today's primary sterling event risk; any signal on the December rate path beyond last week's "further hikes may be warranted" framing could move GBP/USD by 30-50 pips in thin late-London liquidity.

Outlook:

The near-term bias for GBP/USD and EUR/USD is sideways-to-softer while the post-NFP dollar bid persists, with both pairs likely to consolidate within last week's ranges until Tuesday's US CPI resets the December Fed narrative. Treasurers with material USD payables in the next two to four weeks should consider whether current GBP/USD levels near 1.3411 represent an acceptable entry point ahead of a week that could deliver a 150-pip range; the key downside risk scenario is a hot CPI print followed by a soft UK GDP, which would simultaneously reinforce Fed hawkishness and raise domestic stagflation concerns, putting meaningful pressure on GBP/USD toward 1.3300.

This commentary is provided for informational purposes only and should not be construed as investment, legal, or tax advice. Past performance is not indicative of future results. Please consult with qualified professionals before making any financial decisions.