GBP/USD waiting for all the shoes to drop this week

Pretty much everyone polled expects a rate cut from the Bank of England on Thursday. Conversely, the same group are expect nothing from the Fed tonight. That poses something of a conundrum for the GBP/USD. The prospect of UK yields falling below their US equivalents is a headwind for the Pound. For a long time in recent weeks and months the UK 10 year yield has been above that on offer from the US. That has supported the GBP/USD to its best levels since 2022 and saw it rise to 1.3444 last month. Right now those US/UK stand as follows- the US 10 year note is currently at 4.32% and the UK is at 4.49%. Granted that is still in favour of the Pound, but it has converged in recent weeks. The prospect of the BOE cutting this week will likely see that yield fall further. However, beyond the prospect of a 0.25% rate cut on Thursday, it is what the BOE indicate is coming further down the line which might have more of an impact on UK government borrowing costs. There is no doubt the UK consumer and business needs lower rates and so does the Government, with a crippling debt burden in place right now. It will be very interesting to see, if the Pound can withstand what is likely in terms of that interest rate dynamic by the weekend. The GBP/USD is right now at 1.3355