GBP/USD rises above 1.3350 on Bank of England rate hike bets

The GBP/USD exchange rate rose above the 1.3350 level as expectations grew for the Bank of England (BoE) to implement interest rate hikes. Market sentiment is being driven by a combination of resilient UK economic data and a lack of clear forward guidance from the US Federal Reserve.

Federal Reserve Chair Kevin Warsh provided limited signaling regarding future interest rate moves during an IMF meeting in Bangkok, contributing to a softening US Dollar. While US industrial production rose 0.7% in September, investors have priced in only a 15% chance of a 25-basis-point increase at the upcoming October meeting.

In the United Kingdom, BoE Governor Andrew Bailey noted that the economy has proven more resilient than expected, while second-round inflation remains subdued. These factors have led many economists to anticipate a 25-basis-point rate increase by the BoE, potentially coinciding with their next quarterly forecasts. Previous upbeat UK macroeconomic data, including unexpected GDP growth, has also supported the Pound's recovery toward key resistance zones.