GBP/USD remains subdued near 1.3350 ahead of BoE policy decision

GBP/USD holds losses after two days of gains, trading around 1.3350 during the Asian hours on Thursday. The pair depreciates ahead of the Bank of England’s (BoE) interest rate decision due later in the day. Traders will shift their focus toward US weekly Initial Jobless Claims due later in the North American session.

The Bank of England (BoE) is poised to deliver a 25 bps interest rate cut, with median market forecasts expecting the Monetary Policy Committee (MPC) to vote 7-to-3 in favor of a quarter-point trim, bringing the BoE’s main reference rate down to 4.0% from 4.25%. BoE Monetary Policy Report will also be eyed to assess of the prospects for UK inflation over the following two years.

Traders adopt caution ahead of further developments surrounding the next US Federal Reserve (Fed) Chairman. US President Donald Trump announced on Tuesday that he will appoint the Fed’s Chair and Kugler’s replacement by the end of the week. Market sentiment remains cautious as the weaker-than-expected labor market report boosts expectations that the US Federal Reserve (Fed) will deliver a 25 basis point rate cut in September.

Federal Reserve Bank of San Francisco President Mary Daly said on Wednesday that the Fed still has some ground to cover on its fight with inflation pressures despite overall progress. Daly highlighted that the Fed may be forced to act soon without having the full picture. Moreover, Boston Fed President Susan Collins and Fed Board of Governors member Lisa Cook cautioned that persistent uncertainty remains a major obstacle to effective policy transmission.