GBP/USD, EUR/GBP Outlook: Sterling at a Crossroads as BoE Vote Split Looms

Sterling faces a pivotal BoE decision as traders focus on the MPC vote split, with GBP/USD stretched and EUR/GBP probing potential reversal levels.

Sterling heads into the Bank of England decision at a critical juncture. While rates are expected to be held at 3.75%, the MPC vote split has become the primary risk for GBP pairs, with positioning stretched and technical signals flashing warning signs across both GBP/USD and EUR/GBP.

BoE Vote Split in Focus as Sterling Tests Key Levels Across GBP Pairs
The Bank of England is expected to hold its policy rate at 3.75% today and maintain a cautious, data-dependent tone without committing to further cuts. The December decision to cut rates by 25bp was narrower than expected, passing 5–4, underscoring growing division within the MPC. For today’s meeting, estimates suggest a 7–2 vote in favour of holding, with only two members backing another cut.

While economists broadly pencil in one or two additional cuts later this year, market pricing is more restrained. The 1-year OIS implies around an 84% probability of just one cut, while the 3-month OIS prices only a ~20% chance, signalling little expectation of near-term action from the BoE. But given inflation remains above target and yields elevated, traders may want to be on guard for a slightly more dovish message than expected.