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• The Pound Sterling rises against its major currency peers as the BoE is expected to follow a slower monetary easing path.
• Investors wait for the BoE to cut interest rates at least once in the first half of 2026.
• The major highlight of Tuesday will be the flash US Q3 GDP data.

The Pound Sterling (GBP) trades broadly higher against its major peers, and revisits the almost 12-week high to near 1.3500 against the US Dollar (USD) during European trading hours on Tuesday. The British currency gains amid expectations that the Bank of England (BoE) will follow a gradual monetary easing path in 2026.

Last week, the BoE reduced interest rates by 25 basis points (bps) to 3.75%, with a narrow majority vote and guided that “rates are on a gradual path downward”. Four of nine members-led Monetary Policy Committee (MPC) dissented on the interest rate cut amid upbeat wage growth outlook, a scenario that could keep inflation persistently higher than the central bank’s target of 2%.

Though the United Kingdom (UK) headline inflation has consistently cooled down in the last two months on an annualized basis to 3.2% after peaking in the July-September period at 3.8%, it is still significantly higher than the central bank’s target of 2%.

In the press conference, following the BoE’s interest rate decision, Governor Andrew Bailey assured that inflation could return close to the 2% target by the first half of 2026.

According to a report from Reuters, traders expect the BoE to deliver at least one 25 bps interest rate cut in the first half of next year.