Pound Breaks 1.3350 as Warsh's Vague Stance Fuels BoE Rate Hike Bets

The British pound strengthened notably against the US dollar on Friday, rising over 0.6% on the day and breaking through the 1.3350 level. The rally was driven by two key factors: Federal Reserve Chair Kevin Warsh's public remarks failed to provide forward guidance on the future rate path, disappointing dollar bulls; meanwhile, market expectations for a Bank of England rate hike in November continued to build, offering solid support for the pound.

**Warsh's Vague Remarks Pause Dollar Rally**

Fed Chair Warsh's speech was the market's core focus of the day. In his remarks, he did not reiterate the hawkish stance seen on other occasions, nor did he offer clear signals on the upcoming rate decision. This ambiguous tone contrasted with the firmly hawkish stance markets had widely anticipated, putting short-term pressure on the dollar. The dollar index pulled back from recent highs, giving non-USD currencies like the pound room to rebound. Earlier, markets had pushed the probability of a US rate hike above 60% following Warsh's inflation-focused comments.

**BoE Rate Hike Bets Provide Support**

Monetary policy prospects in the UK, meanwhile, injected upward momentum into the pound. Despite signs of a temporary cooling in UK inflation, market participants have repriced the Bank of England's rate path, with expectations for a November hike rising notably. This divergence in policy expectations—vague Fed guidance versus clear BoE tightening expectations—forms a macro backdrop favorable to GBP/USD in the near term. However, some analysts noted that a rebound in energy prices could force the BoE to adopt a more aggressive tightening pace, potentially amplifying market volatility.

**Technical Outlook and Risk Warnings**

From a technical perspective, GBP/USD is currently trading near 1.33298, having previously broken through the 1.3350 resistance level. Some institutional views suggest that as long as the pair holds above key moving averages, the technical picture remains constructive. However, markets should also be wary that if the Fed delivers more hawkish signals at upcoming meetings, or if UK economic data unexpectedly weakens, the pound's rebound momentum could face challenges. According to VT Markets analysis, selling pressure could accelerate quickly if the pair breaks below key support.