- GBP/USD remains on the defensive near 1.2726 amid the stronger USD and risk-off mood.
- Fed is likely to maintain its monetary policy for a fifth straight time at its March meeting.
- BoE is expected to leave rates unchanged at 5.25% on Thursday, with the expectation of cutting rates in August.
- The Fed and Bank of England interest rate decisions will be the highlights of this week.
The GBP/USD pair remains under some selling pressure during the early Asian session on Tuesday. The uptick in the US Dollar (USD) above 103.50 and higher US yields provide some support to the major pair. Markets turn cautious ahead of the central bank meetings, including the Federal Reserve (Fed) and Bank of England (BoE) interest rate decisions. At press time, GBP/USD is trading at 1.2726, down 0.02% on the day.
The Fed is anticipated to keep its interest rate unchanged for a fifth straight time at its March meeting on Wednesday and signal that they still need further evidence that inflation to return sustainably to its 2% target. The Fed Chair Jerome Powell said earlier this month that the US central bank might cut its benchmark interest rate later this year, even though continued progress on lowering inflation to the target “is not assured.”
Traders will also closely monitor press conference, which is unlikely to show a significant shift. However, there is still a possibility that policymakers might reduce the number of rate cuts they anticipate seeing this year to two from the earlier three.
On the other hand, UK inflation is moderating, but the BoE remains cautious in its approach until the CPI returns to the 2% target. The BoE is likely to leave interest rates unchanged at 5.25% on Thursday. Investors expect the UK central bank to start cutting rates in August, with one or two further cuts by the end of the year.
Later on Tuesday, the US Building Permits, and Housing Starts are due in the US docket. All eyes will be on the Fed monetary policy meeting and the press conference on Wednesday. Also, the Fed’s officials will update their quarterly economic projections. On the UK docket, the BoE interest rate decision on Thursday will be in the spotlight. Along with the rate decision, BoE policymakers might offer clues about inflation, economic growth, and the labour market outlook.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD climbs to daily highs near 1.0770 on Dollar selling
EUR/USD manages to regain extra upside traction on the back of the renewed sell-off in the Greenback, reaching fresh daily highs in the 1.0770 region, or. two-day peaks.
GBP/USD hovers around 1.2500 post-BoE
GBP/USD alternates gains with losses around the 1.2500 neighbourhood amidst extra weakness in the Dollar, while market participants continue to digest the BoE event.
Gold improves to multi-day highs past $2,330
XAU/USD now gathers fresh steam and advances to the highest level in many sessions north of the $2,330 mark per troy ounce on the back of further selling pressure hurting the Greenback as well as mixed US yields.
Solana meme coins TREMP, BODEN rise after Donald Trump’s pro-crypto stance
Solana-based meme coins TREMP and BODEN post nearly 125% and 7% gains on Thursday. Former US President Donald Trump says his campaign will likely accept crypto donations.
Bank of England inches one step closer to a summer rate cut
The Bank of England is undoubtedly turning more optimistic, but it’s keeping its options open amid some uncertainty surrounding the near-term inflation numbers. We still narrowly expect the first rate cut in August.