British Pound Recovery Mixed Amid Rising BOE Rate Hike Bets

The British pound is showing a mixed recovery as expectations rise for another interest rate hike by the Bank of England (BOE) in November. Recent economic data, including a sharp rise in output prices in September, and hawkish comments from BOE officials have renewed bets for a rate increase. Markets are currently pricing in a 64% chance of a 25 basis point hike, with the 3-month OIS rate climbing to 3.91%.

While the pound has strengthened against some currencies like the euro and Swiss franc, it remains under pressure against the US dollar and Japanese yen. Technical analysis suggests that the best near-term opportunities for sterling bulls may lie in pairs like GBP/CAD and GBP/AUD, rather than GBP/USD.

GBP/USD has fallen 3.2% from its August high but is holding above key support levels. However, the outlook remains uncertain due to the US dollar's recent strength. EUR/GBP has rolled over, aligning with a bearish bias, while GBP/JPY and GBP/CHF show choppy price action.

GBP/CAD is in an established uptrend, with potential upside targets at the monthly S1 level of 1.8966 and the 1.9000 handle. GBP/AUD bulls are watching for a break above the March high to confirm a longer-term bullish reversal, with nearby support at the monthly S1 and 1.88 handle.