GBP/USD Market Movements: Anticipating Central Bank Decisions Amid Key Economic Data Releases

During the early hours of the Asian trading session on Tuesday, the GBP/USD currency pair showed signs of recovery, slightly reversing some of its recent losses. The pair is currently trading around 1.2565, marking a modest gain of 0.07% for the day. This week, the focus is on the upcoming interest rate decisions from the US Federal Reserve (Fed) and the Bank of England (BoE), events that are likely to influence the pair’s trajectory.

The Federal Open Market Committee (FOMC) is set to start its two-day meeting on Tuesday, with the interest rate decision expected on Wednesday. The consensus in the market is for the FOMC to maintain interest rates at the current range of 5.25–5.50% for the third consecutive meeting.

Additionally, there is a prevailing expectation that the FOMC will not only cease increasing interest rates but also commence rate cuts as early as March 2024.

In the UK, market participants are predicting that the BoE will keep its interest rates steady at 5.25%.

It’s anticipated that the BoE will adhere to its stance of maintaining higher rates for an extended period.

However, compared to the Fed and the European Central Bank (ECB), the BoE is expected to implement rate cuts at a more gradual pace next year.

This week is also significant for economic data releases. The focus will be on the UK employment data scheduled for Tuesday, which includes the Unemployment Rate, Claimant Count Change, and wage inflation figures. The UK’s Unemployment Rate is expected to remain stable at 4.2% for the three months ending in October.

On the US front, the Consumer Price Index (CPI) data is due later on Tuesday. This monthly CPI figure is anticipated to show a growth of 0.1% from the previous month’s 0%, and the annual rate is projected to decrease slightly from 3.2% to 3.1%. Additionally, the US Producer Price Index (PPI) will be released on Wednesday.

Technical Outlook for GBP/USD:

The GBP/USD pair recently tested a critical resistance level at 1.2590 but remained below this threshold, sustaining the current bearish trend. This trend is influenced by a completed double top pattern, with the next primary target set at 1.2460.

The resistance level at 1.2590, reinforced by the EMA50, adds credibility to the bearish outlook.

However, a breach of this resistance could halt the current negative trend and potentially lead to a price recovery for the pair.

The trading range expected for today is between the support level of 1.2470 and the resistance level of 1.2620.

GBP/USD Live Chart