GBP/USD has been trading in a near-term range just below 1.2900 as markets wait for key decisions from both the Federal Reserve and the Bank of England. The Fed recently decided to hold rates steady for July, with expectations of a rate cut in September. The BoE is also expected to deliver a rate cut for the first time since March 2020, with odds of a 5-to-4 vote from the MPC.
Fed Chairman Jerome Powell outlined the conditions necessary for a rate cut in September, including easing inflation figures and stable or softening US labor markets. The upcoming US Nonfarm Payrolls data release on Friday will be closely watched for any indication of meeting the Fed’s criteria. The BoE is expected to announce a quarter-point rate cut on Thursday, with a narrow 5-to-4 vote expected from the MPC.
GBP/USD has been struggling to gain bullish momentum, dropping below 1.2900 from highs near 1.3045. The pair is currently trading above the 50-day EMA at 1.2791, indicating a semblance of support. The long-term trend remains bullish, with GBP/USD trading above the 200-day EMA at 1.2642. Traders will be looking for higher lows to form a pattern that could push Cable higher, as long as the recent pullback remains above the last swing low around 1.2600.
In conclusion, GBP/USD is facing a pivotal moment as markets await decisions from both the Fed and the BoE. The Fed’s criteria for a rate cut in September will be closely watched, with US Nonfarm Payrolls data release holding significant importance. The BoE is expected to announce a rate cut, with expectations of a close vote from the MPC. Technical indicators suggest a bullish trend for GBP/USD, with traders looking for signs of a potential rally as long as key support levels are maintained.
