Pound Sterling Price News and Forecast: GBP/USD mildly offered around 1.2550 as traders await Fed, BOE

FXStreet Team FXStreet

GBP/USD opens flat at around 1.2580, focus shifts on Fed-BOE policy meet

The GBP/USD pair is hovering around 1.2580 and is likely to extend further amid a rebound in the risk-sensitive currencies, witnessed on Friday. The cable attracted significant bids around 1.2510 as responsive buyers found it a value bet and drove it higher. The asset is expected to deliver wild moves this week as the market participants are awaiting the announcement of the interest rate hike by the Federal Reserve (Fed) and Bank of England (BOE) this week.

The Fed is going to bring tremendous uncertainty in the FX domain amid its dominance and expectation of a jumbo rate hike. Multi-decade inflation print at 8.5% and consistency in full-employment levels are advocating a 50 basis point (bps) interest rate hike from Fed policymakers. Along with the hawkish tone on rate announcements, hawkish guidance from the Fed is also expected to contain the inflation mess.

GBP/USD: Mildly offered around 1.2550 as traders await Fed, BOE

GBP/USD fails to extend the previous day’s corrective pullback from a two-year low, down 0.15% intraday as sellers attack 1.2550 during early Monday morning in Europe.

The cable pair’s latest weakness could be linked to the US dollar’s strong start to the key week comprising the monetary policy meeting of the Fed, as well as April’s Nonfarm Payrolls (NFP). Also weighing on the quote are the chatters surrounding the Bank of England (BOE) policymakers’ inability to copy the Fed’s tune, due to economic hardships at home.

AUD/USD holds rebound near 0.6900 on US-China trade optimism

AUD/USD holds the rebound near 0.6900 in the Asian session on Monday. Mixed China's inflation data for October fails to provide any inspiration to the Chinese proxy, the Australian Dollar, but China's extension of the suspension of 24% tariffs on US goods and reduced US-Iran tensions help the Aussie pair cling to recovery gains.

USD/JPY retreat in sync with USD, appraches 158.00

USD/JPY is back in the red at the start of the week on Monday, eyeing the broad US Dollar retreat amid easing US-Iran tensions. Traders also resorting to profit-taking following the blockbuster US Nonfarm Payrolls data-led rally. US CPI report is next in focus.

Gold rises amid US-Iran peace deal hopes, softer US Dollar

Gold price recovers some lost ground above $4,020 during the early European trading hours on Monday. The prospects of diplomacy in the US-Iran conflict and weaker US Dollar (USD) boost the precious metal.

Bitcoin faces pressure as weekly ETF outflows hit $1.28 billion

Bitcoin remains under pressure on Monday, trading below the 50-week Simple Moving Average at $75,222 after extending its losing streak to five consecutive weeks. Bearish sentiment strengthened as $1.28 billion in net outflows from spot BTC Exchange-Traded Funds last week marked the largest weekly withdrawal since late June.

Economics week ahead

This week, attention turns to Tuesday’s CPI report, with no year-over-year readings available because of last October’s shutdown-related data gap. We expect headline and core inflation to clock 0.28% and 0.21% month-over-month, respectively. Softer core inflation would offer some relief after September’s upside surprise but should still leave our call for a December rate hike intact.

US Dollar breaks below 101.50 as Democrats sweep Congress

The US Dollar (USD) comes under heavy selling pressure on Wednesday, with the US Dollar Index (DXY) falling around 0.5% to trade near 101.35 after sliding below the 101.50 level. The Greenback retreats to its lowest level in four weeks as investors reassess the political and economic outlook following the Democratic Party's sweeping victory in the United States (US) midterm elections.