GBP/USD meanders around 1.1400 ahead of the Fed/BoE’s decision

The British pound remains under pressure amidst a week where a lot of central banks would feature their monetary policy meetings for September; being in the spotlight, the US Federal Reserve and the Bank of England, each estimated to raise rates by 75 and 50 bps, respectively. Therefore, the GBP/USD oscillates above/below the 1.1410 mark, for the second consecutive day, at the time of writing.

Global equities portray a dismal sentiment. Traders expect an aggressive Federal Reserve on Wednesday, and uncertainty about the Summary of Economic Projections (SEP) update keeps investors on their toes.

GBP/USD hovers around 1.1410 awaiting the central bank’s decisions

US housing data crossing newswires shows the sector is feeling higher interest rates by the US central bank. The US Commerce Department reported that US Home Building Permits dropped below expectations of 1.604M to 1.517M. Contrarily, Housing Starts rebounded 12.2%, crushing forecasts of 0.3%, while July data was revised down.

In the meantime, the US Dollar Index, a headwind for the GBP/USD, rises more than 0.30%, up at 109.985, underpinned by higher US Treasury bond yields. The US 10-year benchmark note rate sits at 3.596%, skyrocketing ten bps, reaching its highest level since April 2011.

Of late crossing newswires, the UK’s new Prime Minister Liz Truss said, “We have to look at all tax rates.” She added that the UK’s Chancellor would outline that the new government will be fiscally responsible on Friday.

That said, traders should expect choppy trading conditions in the GBP/USD ahead of both central bank monetary policy decisions. Wednesday’s UK economic docket will feature the Confederation of British Industry (CBI) Index, estimated to contract -13. The calendar will reveal US Existing Home Sales on the US front ahead of the FOMC’s monetary policy decision.

GBP/USD Key Technical Levels