British Pound Sees Mixed Recovery Amid BOE Rate Hike Speculation

The British pound is showing mixed recovery signs as expectations for another Bank of England (BOE) rate hike in November rise. While the pound faces pressure from a stronger US dollar and Japanese yen, it is benefiting from a weaker euro, Swiss franc, and New Zealand dollar. The pound also shows potential for gains against the Canadian dollar and Australian dollar.

Recent economic data and BOE communications have revived hawkish bets. September PMI data indicated the sharpest rise in output prices since May, and several MPC members have warned about persistent inflation pressures. Markets are now pricing in a roughly 64% chance of a 25bp hike in November, with the 3-month OIS rate rising to 3.91%.

Technically, the pound's recovery is uneven. GBP/USD has fallen 3.2% from its August high but remains above key swing lows. EUR/GBP has rolled over, aligning with a bearish bias, while GBP/JPY and GBP/CHF show choppy price action. The most promising opportunities for sterling bulls may lie in GBP/CAD and GBP/AUD.

GBP/CAD shows an established uptrend on the weekly chart, with a swing low forming in early September. The daily chart indicates potential upside targets at 1.8966 and 1.9043. Meanwhile, GBP/AUD is retracing lower, with a focus on identifying a swing low or bullish reversal signs.