The British Pound rallies on a UK growth upgrade and gives more than half back

Markets put a better than 80% chance on the Bank of England (BoE) raising the UK's Bank Rate from 3.75% on November 5, and GBP/USD still couldn't close above 1.3300. The pair broke through 1.3300 after second-quarter Gross Domestic Product (GDP) was revised up, then gave back more than half of the rally before the close. September was the Pound's worst month against the Dollar in nearly a year. The BoE voted six to three to hold on September 17, and five weeks before it meets again the market has all but voted to hike.

A 0.1-point upgrade against a 5.30% Treasury yield

Growth in the second quarter was revised to 0.5% from 0.4%, and to 1.4% YoY from 1.2%. The upgrade came mostly from exports, which rose 2.8%, while household spending grew only 0.3%. BoE Governor Bailey and Deputy Governor Ramsden have both said persistently high energy prices would make it hard to leave rates where they are.

What moves GBP/USD is the gap between UK and US rates. The Bank Rate is 3.75% against the Fed's 3.75-4.00% range, and US 10-year borrowing costs climbed to their highest since 2007 on Wednesday. A British economy that grew a little faster in the spring is good news for Britain and does very little for a currency pair priced off the gap to US yields.

One Bank of England speech against five from the Fed

External member Mann speaks on Thursday at 12:00 GMT. The Institute for Supply Management (ISM) factory survey follows at 14:00 GMT with a forecast of 55, and five Fed officials speak later the same day. Friday brings Nonfarm Payrolls, where the forecast is 90K against August's 162K.

A strong US jobs count would widen the rate gap GBP/USD has been falling on since early September, whatever Mann says. She voted to hike in September, so the likeliest outcome of her speech is a hike voter explaining that she still wants a hike.

GBP/USD levels into Friday's payrolls

Resistance: 1.3300 turned Wednesday's rally back just above it and has capped every close since the September 23 drop. 1.3350, where that drop started, is next.

Support: 1.3200, the September 29 low and the pair's lowest in about three months, is the first floor. 1.3150 is below it.

Bias: Short while 1.3300 holds on a closing basis, with 1.3200 as the first objective and 1.3150 as the second. On the daily chart, the Stochastic Relative Strength Index (Stoch RSI) has flattened near 9 at the bottom of its range, which leaves room for a bounce without changing the view. A daily close above 1.3350 flips it.

GBP/USD daily chart