BOE's Breeden casts doubt on path to lower energy prices

Bank of England Deputy Governor Breeden has shared her views on energy prices and inflation.

• It is not at all obvious that energy prices will decline.
• So far, the indirect pass-through of higher energy prices has been limited, indicating slack in the economy.
• A larger and more prolonged energy shock would increase the need for a policy response.
• The balance of risks has shifted, and as risks materialise, the BOE is increasingly likely to need to act.
• One cannot afford to wait too long for clear evidence of second-round effects.
• Breeden focuses on what firms say about their pricing decisions.
• She regards the DMP survey, PMI, and Agents' survey as important signals.
• Unlike in 2022, the starting point is one where policy is already restrictive.
• A meeting-by-meeting approach to rate decisions is required.
• The issue for her is whether an initial move is needed, with more uncertainty about the scale of further action.

Breeden's comments are slightly hawkish but conditional. She is concerned that prolonged high energy prices could affect what firms charge for other goods and services. That is why she monitors their pricing plans and warns against waiting for definitive evidence of knock-on effects before acting.

A counterpoint exists: the indirect impact of higher energy prices has been limited so far, suggesting some economic slack. She also notes that policy was already restrictive. The question for traders is whether that restraint will hold or whether firms will start passing more costs to customers.

On the technical side, GBPUSD is trading at its lowest since late June, testing a swing zone between 1.3212 and 1.3219. The session's low of 1.3215 lies within that zone, meaning sellers have reached support but have not yet broken it.

A sustained move below 1.3212 would give sellers another win and shift attention to the next swing area at 1.3171–1.3181. Below that is the June 2026 low of 1.31393, the year's lowest level and the weakest since November 2025.

For traders managing risk, 1.32729 is a more conservative level to watch. It acted as swing highs and lows during June, July and August. While the price stays below it, sellers remain in control. A move back above it would weaken the bearish bias and suggest the downward move is losing momentum.