The pound maintained its gains against the dollar around 1.3445 in early European trading on Tuesday. However, market sentiment may turn cautious later in the day as the US October Consumer Price Index (CPI) report is due. Last week, the Bank of England raised its benchmark interest rate by 25 basis points to 4.00% , its first rate hike in over three years. The bank also warned that at least one more rate hike would be needed if the US-Iran conflict continues. Andrew Goodwin, chief UK economist at Oxford Economics, said, "The December meeting now looks like a coin toss; the path of oil and gas prices will be the decisive factor." Analysts at ABN AMRO noted that the Bank of England's 25 basis point increase in the bank rate to 4.00% matched the upper limit of the 3.75-4.00% federal funds rate range. The bank emphasized that the decision was firmly hawkish – "eight members" of the Monetary Policy Committee supported the rate hike, and "one member" favored a 50 basis point increase. The bank added that the committee "expects inflation to reach around 5% by mid-2027 and hinted at further rate hikes unless the Middle East conflict is resolved," indicating that even with the UK policy rate now aligned with the upper limit of the current US range, the tightening bias remains conditional. However, Bank of England official Pill's latest speech scored only 4.2/10 on the FXS speech tracker, well below the historical average of 6.4/10, indicating a more cautious and less resolute policy stance. He emphasized that there is "no set agenda" for next year and that there is "no predetermined upward path" for interest rates starting in the spring, a statement marking a shift from an assumption of "continued tightening" to a more dovish stance. His acknowledgment that if economic growth stagnates next year, bank interest rates may remain unchanged or even be lowered, further amplifying downside risks for the pound, especially given weaker-than-expected UK data. His emphasis on profit margin squeezes and corporate responses highlights concerns about growth and profitability, supporting the view that the Bank of England may prioritize economic resilience over further rate hikes—a situation typically unfavorable to the pound against other major currencies such as the dollar and euro. Last Friday's strong US October jobs report may limit the dollar's decline. Traders have increased their bets on further Fed rate hikes, with the market currently pricing in an 84% probability of a rate hike next month. From a technical perspective, the GBP/USD pair maintains a constructive outlook on the daily chart. The spot price has risen above the 100-day simple moving average (1.3400) and the Bollinger Middle Band , providing support for the recent rally. The price is pushing towards the upper Bollinger Band, which forms the immediate resistance level. The Relative Strength Index (RSI) is around 57 and trending upwards, indicating constructive upward momentum, but it has not yet entered overbought territory. On the upside resistance front, the upper Bollinger Band at around 1.3500 is the first resistance level to break; a sustained break above this level would open up space for the September 9 high of 1.3568 , and subsequently target the August 21 high of 1.3675 . On the downside support front, the 100-day moving average at 1.3400 provides immediate support; further selling below this level could expose the middle Bollinger Band at around 1.3370 , the October 28 low of 1.3272 , and the lower Bollinger Band at 1.3235 . On the 4-hour chart, the exchange rate continued its upward trend after breaking above 1.3400, indicating a shift from a weak to a strong short-term structure. However, resistance is present near the upper Bollinger Band at 1.3500, and the market may fluctuate around this level before a breakout. If the CPI data is lower than expected, the exchange rate could potentially rise to 1.3500 and extend towards 1.3568. Conversely, if the CPI data strengthens expectations of an interest rate hike, causing the US dollar to rebound, the exchange rate may fall back to test 1.3400, and a break below this level would target the middle Bollinger Band at 1.3370. Editor's Summary: The core driver of the current GBP/USD exchange rate is the tug-of-war between the hawkish stance of the Bank of England's first rate hike in over three years and its hints of conditional further rate increases, and the dovish stance of committee member Peale's clear indication of a possible rate cut next year, emphasizing growth and profit squeeze. The 100-day moving average at 1.3400 has turned from resistance to support, while 1.3500 is the first hurdle the bulls must overcome. In the medium term, if rising oil and gas prices push UK inflation to around 5% by mid-2027, the Bank of England will have the conditions to maintain tightening, and the pound could extend towards 1.3568 or even 1.3675. Conversely, if UK economic data is weaker than its peers, and the December meeting proves to be a "coin toss," rising expectations of a rate cut will put renewed pressure on the pound, potentially leading to a retest of 1.3272-1.3235. Key attention should be paid to Tuesday's CPI, the path of UK inflation and energy prices, and the evolution of official statements before the December meeting.