GBP/USD holds steady above mid-1.3300s as traders await key data and BoE this week

GBP/USD struggles to lure buyers on Monday amid a modest US Dollar uptick.
Dovish Fed expectations act as a headwind for the USD and support the major.
Traders keenly await this week’s key macro releases and the BoE rate decision.

Haresh Menghani FXStreet

The GBP/USD pair remains on the defensive during the Asian session on Monday, though it lacks bearish conviction and holds above the 200-day Simple Moving Average (SMA) pivotal support. Spot prices currently trade around the 1.3360 region, nearly unchanged for the day.

The US Dollar (USD) is looking to build on last week's modest bounce from an over two-month low and is turning out to be a key factor acting as a headwind for the GBP/USD pair. A slight deterioration in the global risk sentiment – as depicted by a generally weaker tone around the equity markets – is seen offering some support to the safe-haven buck. The USD bulls, however, seem reluctant to place aggressive bet amid dovish US Federal Reserve (Fed) expectations.

Despite the Fed's cautious signal last week, traders are still pricing in the possibility of two more interest rate cuts next year as signs of a weakening labor market are becoming increasingly evident. Furthermore, the prospect of a Trump-aligned Fed chair should keep a lid on any meaningful USD recovery and help limit the downside for the GBP/USD pair. Traders also seem reluctant ahead of this week's important macro releases and the central bank event risk.

The UK monthly employment details will be published on Tuesday, ahead of the delayed US Nonfarm Payrolls (NFP) report for October. This will be followed by the latest UK inflation figures on Wednesday and the crucial Bank of England (BoE) policy decision on Thursday, which will play a key role in influencing the British Pound (GBP). Apart from this, the US consumer inflation figures on Thursday could determine the near-term trajectory for the GBP/USD pair.

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 revisits 1.1780, or daily lows

EUR/USD now comes under further selling pressure, breaking below the 1.1800 support to reach daily troughs on Thursday. The pair’s decline comes in response to a sudden bout of USD strength amid steady geopolitical tensions. Ealier in the day, the ECB’s Lagarde delivered cautious remarks, although the currency remained apathetic.

GBP/USD makes a U-turn, challenges 1.3500

GBP/USD rapidly leaves behind Wednesday’s strong advance, putting the 1.3500 support to the test on Thursday. Cable’s deep pullback follows the strong gains in the Greenback, while investors continue to pencil in a potential BoE rate cut in March.

Gold sticks to the bid bias, flirts with $5,200

Gold is now facing some downside pressure, hovering around the $5,170 region on Thursday. The precious metal adds to Wednesday’s optimism despite the Greenback trades in a firm fashion, although geopolitical tensions in the Middle East keep the yellow metal bid for now.