Date: 6th November 2025.
BoE’s Dovish Hold Sets Stage for December Cut as GBPUSD Forms Bearish ‘M’ Pattern.
The Bank of England kept its benchmark rate unchanged at 4.00%, but the decision came through an unusually close 5-4 split vote, with four members already favouring a rate cut. The narrow margin underlines a growing shift within the Monetary Policy Committee (MPC) towards easing policy sooner rather than later, likely as early as December.
A Dovish Hold with a Divided Committee
The BoE’s policy statement revealed a notably softer tone, acknowledging that inflation risks have become less pressing and that domestic price pressures are easing faster than expected. Governor Andrew Bailey said the outlook is now ‘more balanced,’ though he remains cautious, insisting the Bank needs ‘further evidence’ before moving on rates.
Among the nine MPC members, Breeden, Ramsden, Dhingra and Taylor voted for a 25 bps cut, arguing that monetary conditions have become too restrictive amid weakening demand and signs of fading inflation momentum. In contrast, Mann and Pill warned that premature easing could risk inflation persistence, preferring to maintain the current stance.
The BoE’s revised guidance, now saying rates are ‘likely to continue on a gradual downward path,’ omitting the previous ‘careful’ qualifier, reinforces expectations for a rate cut in December, especially once the autumn budget passes.
GBPUSD Reaction: Up but Off Highs
Despite the dovish tilt, GBPUSD initially climbed to 1.31, buoyed by broad USD weakness and expectations that the BoE’s gradual easing path might still offer near-term support to sterling. However, the pair later retreated towards 1.3065, reflecting profit-taking and a shift in risk sentiment following a sharp rise in US job-cut data.
US Challenger announced job cuts spiked 153.1k in October following the 54k increase in September. It is the largest gain for an October since 2003. Technology and warehousing led the jump. For the year-to-date, announced layoffs total 1.09k. The y/y pace surged to a 175.3% clip from -25.8% previously. Challenger noted some companies are downsizing after the pandemic boom. But AI, weaker consumer and business spending, and rising costs are factors too. Announced hirings increased 165.8k following September’s 115.8k gain. Technology led the way with 250k, followed by retail at 16k.
This was the largest October increase since 2003, a stark reminder that AI-driven restructuring and post-pandemic corrections are cooling the job market. The US dollar index (DXY) fell back below 100 following the data.
Technical Picture: ‘M’ Formation Points to Potential Downside
On the daily chart, GBPUSD has formed a clear ‘M’ formation, a classic double-top pattern signalling the long-term trend exhaustion. The neckline currently sits near 1.3150, and a confirmed continuation below this level could open the door toward the 1.27-1.28 area, especially if market sentiment turns risk-off or if US data support a dollar rebound. For now, the USD seems to have run out of steam.
From a risk management perspective, sellers currently hold a better risk-to-reward setup near the 1.3150 resistance and the major downward trendline, aiming to target new lows if the bearish momentum extends below 1.3000. Buyers, on the other hand, will look for a decisive breakout above 1.3140 to gain conviction and potentially extend the pullback toward new highs.
GBPUSD Technical Analysis – 4-Hour Timeframe
On the 4-hour chart, the price action remains more constrained. The two key resistance zones are still clustered around 1.3140 and 1.3250, where the major descending trendline comes into play. Until a breakout occurs on either side, short-term traders are likely to see choppy consolidation, with intraday momentum dictated by incoming US labour and inflation data.
Outlook
The BoE’s dovish split marks a turning point for UK monetary policy, signalling that the next move is down, not up. With inflation decelerating and growth subdued, the Bank seems ready to prioritise supporting demand over tightening further.
Still, the pound’s direction in the coming weeks will hinge on two key drivers:
* The December BoE meeting, confirmation of a cut could accelerate sterling weakness.
* US data trajectory, further signs of labour market stress or Fed dovishness could offset sterling downside through a softer dollar.
For now, traders will be watching the 1.3050 neckline and 1.3140 resistance closely. A sustained break below the former could validate the M-formation and accelerate bearish momentum, while a rebound above the latter might signal the start of a corrective rally before December’s pivotal BoE decision.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
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Andria Pichidi
HFMarkets
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