- GBP/USD struggles for a firm near-term direction and oscillates in a familiar trading range.
- Reduced bets for an early BoE rate cut underpin the GBP and lend some support to the pair.
- The uncertainty over the Fed’s rate-cut path holds back traders from placing directional bets.
The GBP/USD pair ticks higher following an Asian session dip on Monday, albeit lacks follow-through and remains confined in a familiar range held over the past two weeks or so. Spot prices currently trade around the 1.2700 mark, nearly unchanged for the day as traders await a fresh catalyst before positioning for a firm near-term trajectory.
Hence, the focus remains glued to the outcome of the highly-anticipated two-day FOMC monetary policy meeting starting on Tuesday amid the uncertainty over the timing of the first interest rate cut. Data released on Friday showed that the US inflation rose modestly in December and reaffirmed expectations that the Federal Reserve will cut rates by the middle of 2024. That said, stronger growth in Personal Incomes fueled a surge in spending, which, along with the upbeat US Q4 GDP print, suggested that the economy is still in good shape. This, in turn, raises doubts over the possibility of more aggressive policy easing by the Federal Reserve (Fed), which acts as a tailwind for the US Dollar (USD) and should cap the GBP/USD pair.
Apart from this, a generally weaker tone around the equity markets assists the safe-haven buck to stand tall near its highest level since December 13 touched last week. That said, hopes for a soft landing for the US economy keep a lid on the US Treasury bond yields and the USD. Apart from this, expectations that a slight pickup in Britain's stagnant economy could delay the start of the Bank of England's (BoE) policy easing cycle could lend support to the British Pound (GBP) and continue lending support to the GBP/USD pair. The recent range-bound price action, however, points to indecision among traders over the next leg of a directional move for spot prices and warrants some caution for aggressive traders.
Moving ahead, there isn't any relevant market-moving economic data due for release on Monday, either from the UK or the US, leaving the GBP/USD pair at the mercy of the USD price dynamics. Investors, meanwhile, might prefer to wait on the sidelines ahead of this week's key central bank event risk and important US macro data scheduled at the start of a new month, including the Nonfarm Payrolls on Friday. Hence, it will be prudent to wait for a sustained breakout through the short-term trading band before positioning for a firm near-term direction.
Technical levels to watch
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 eases to daily lows near 1.0260
Better-than-expected results from the US docket on Friday lend wings to the US Dollar and spark a corrective decline in EUR/USD to the area of daily lows near 1.0260.
GBP/USD remains under pressure on strong Dollar, data
GBP/USD remains on track to close another week of losses on Friday, hovering around the 1.2190 zone against the backdrop of the bullish bias in the Greenback and poor results from the UK calendar.
Gold recedes from tops, retests $2,700
The daily improvement in the Greenback motivates Gold prices to give away part of the weekly strong advance and slip back to the vicinity of the $2,700 region per troy ounce at the end of the week.
Five keys to trading Trump 2.0 with Gold, Stocks and the US Dollar Premium
Donald Trump returns to the White House, which impacts the trading environment. An immediate impact on market reaction functions, tariff talk and regulation will be seen. Tax cuts and the fate of the Federal Reserve will be in the background.
Hedara bulls aim for all-time highs
Hedara’s price extends its gains, trading at $0.384 on Friday after rallying more than 38% this week. Hedara announces partnership with Vaultik and World Gemological Institute to tokenize $3 billion in diamonds and gemstones
Trusted Broker Reviews for Smarter Trading
VERIFIED Discover in-depth reviews of reliable brokers. Compare features like spreads, leverage, and platforms. Find the perfect fit for your trading style, from CFDs to Forex pairs like EUR/USD and Gold.