Recent Fed tightening has flipped the policy rate differential against sterling, with the U.S. target range at 3.75–4.00% after the September hike versus the Bank of England’s unchanged 3.75% Bank Rate, driving GBP/USD to 12-week lows near 1.32. Markets price further Fed hikes amid resilient U.S. PMIs and inflation pressures, while UK CPI rose to 3.1% in August and is projected above 3.5% later in 2026 due to Middle East energy shocks. The BoE’s 6–3 September hold and forward guidance signal limited near-term easing, yet trader consensus reflects uncertainty over whether UK growth and inflation data will force additional tightening. Key upcoming catalysts include the October FOMC, November BoE meeting, and releases on CPI, employment, and GDP that could shift rate expectations and the pair’s trajectory through year-end.