GBP/USD consolidates above mid-1.3200s as traders move to the sidelines ahead of BoE this week

GBP/USD struggles to gain any meaningful traction at the start of a new week.
Aggressive Fed rate cut bets cap the recent USD move up and support the pair.
The GBP bulls seem reluctant ahead of the BoE policy meeting on Thursday.

Haresh Menghani FXStreet

The GBP/USD pair kicks off the new week on a subdued note and oscillates in a narrow trading band around the 1.3260-1.3265 area, near a one-week low touched during the Asian session.

The US Dollar (USD) remains on the defensive below a multi-week top amid heightened economic uncertainty on the back of US President Donald Trump's tariff plans and turns out to be a key factor acting as a tailwind for the GBP/USD pair. Adding to this, the prospect of more aggressive policy easing by the Federal Reserve (Fed) further seems to undermine the Greenback.

Despite the better-than-expected release of the US Nonfarm Payrolls (NF) report on Friday, investors seem convinced that the US central bank will resume its rate-cutting cycle in June and lower borrowing costs by 100 basis points by the end of this year. This, along with the optimism over the potential de-escalation of the US-China trade war, dents demand for the safe-haven buck.

Traders, however, seem reluctant to place fresh bullish bets around the GBP/USD pair and opt to wait for this week's key central bank event risk – the Bank of England (BoE) monetary policy meeting on Thursday. The UK central bank is widely expected to cut interest rates by 25 bps and adopt a slightly dovish stance amid downside risks to growth from the trade war.

Apart from this, traders this week will take cues from the outcome of the crucial two-day FOMC policy meeting on Wednesday, which will influence the USD price dynamics and provide some meaningful impetus to the GBP/USD pair. In the meantime, Monday's release of the US ISM Services PMI will be looked upon to grab short-term opportunities later during the early North American session.

Economic Indicator

BoE Interest Rate Decision

The Bank of England (BoE) announces its interest rate decision at the end of its eight scheduled meetings per year. If the BoE is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Pound Sterling (GBP). Likewise, if the BoE adopts a dovish view on the UK economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for GBP.

EUR/USD edges lower below 1.1650 as Middle East tensions fuel US Dollar strength

The EUR/USD pair trades in negative territory around 1.1635 during the early Asian session on Thursday. The US Dollar strengthens against the Euro as escalating Middle East conflict boosts safe-haven flows. Traders brace for the Eurozone Retail Sales and US weekly Initial Jobless Claims reports, which will be released later on Thursday.

GBP/USD tests key moving averages as growth downgrade weighs

GBP/USD was nearly flat on Wednesday, edging up 0.08% to settle around 1.3370 in a quiet session. The pair has fallen sharply from its late-January high near 1.3870 and is now testing the 200-day Exponential Moving Average, with this week's one-week forex heatmap showing Pound Sterling as one of the worst performers against the US Dollar, down about 1.4% on the week.

Gold benefits from a retreating USD; reduced Fed rate cut bets cap gains

Gold attracts some buyers for the second consecutive day on Thursday amid a modest US Dollar pullback from an over three-month high, though it remains below the $5,200 mark. Wednesday's upbeat US macro data further tempered hopes for three rate cuts by the Fed in 2026. Furthermore, escalating Middle East tensions might continue to benefit the USD's status as the global reserve currency and contribute to capping the bullion.