GBP/USD Drops as BoE Rate Cut Expectations Surge, Yield Support Erodes

GBP/USD has come under significant selling pressure as markets increasingly price in accelerated Bank of England rate cuts, eroding the yield differential that had previously supported the pound. The pair's decline reflects a fundamental shift in monetary policy expectations, with traders now anticipating a more dovish BoE stance amid softening UK economic conditions. The fading yield support has compounded bearish momentum, as UK gilt yields retreat relative to US Treasury yields, diminishing the carry trade appeal of sterling. Cross-pair dynamics are also notable, with EUR/GBP firming and GBP/CHF weakening, underscoring broad-based pound vulnerability. Gold's continued strength against the US dollar (XAU/USD) suggests underlying risk aversion is also weighing on sentiment. Near-term technical levels will be critical for traders, as a sustained break below recent support zones could open the door for further downside. Traders should monitor upcoming UK inflation and employment data, as these releases will be pivotal in confirming or challenging the market's dovish BoE repricing.