GBP/USD Price Analysis: Oscillates in trading range above 1.2700 ahead of Fed, BoE rate decision
|- GBP/USD consolidates in a trading range near 1.2708 ahead of the Fed and BoE rate decisions this week.
- The Relative Strength Index (RSI) indicator suggests the non-directional action of the pair.
- The immediate resistance level is located at 1.2738; the next support level will emerge at 1.2675.
The GBP/USD pair remains confined in a narrow trading range above the 1.2700 mark during the early European trading hours on Tuesday. Investors prefer to wait on the sidelines ahead of key events from the Federal Reserve (Fed) and the Bank of England (BoE). At press time, GBP/USD is trading at 1.2708, down 0.02% on the day.
The Fed is widely anticipated to hold benchmark interest rates steady at a 23-year high of 5.25–5.50% at its January meeting on Wednesday, after a lengthy effort to tame rampant inflation. Meanwhile, the BoE is expected to keep rates steady. Nonetheless, signs that the inflation crisis is easing off might convince the UK central bank to lower rates after all.
From a technical perspective, GBP/USD oscillates in the two-week-old trading range on the four-hour chart. The major pair is above the 100-period Exponential Moving Average (EMA). However, the bullish outlook of GBP/USD remains vulnerable as the Relative Strength Index (RSI) hovers around the 50 midlines, suggesting the non-directional action of the pair.
The upper boundary of the Bollinger Band at 1.2738 acts as an immediate resistance level for the pair. A decisive break above the latter will pave the way to a high of January 26 at 1.2758. Further north, the next upside target to watch is a high of January 12 at 1.2785, en route to a high of December 28 at 1.2828.
On the other hand, a breach of the 1.2700 round figure will see a drop to the lower limit of the Bollinger Band at 1.2675. The critical contention level is seen at the 1.2600–1.2610 zone, representing the confluence of the psychological mark and a low of January 2. Any follow-through selling below the latter will expose a low of December 11 at 1.2535.
GBP/USD four-hour chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.