**GBP/USD Weekly Forecast: Range-bound Ahead of BoE & Fed Cut Decisions**
*Adapted from an article by Yohay Elam at Forex Crunch*
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### Overview
The GBP/USD pair remained trapped in a tight range over the past week as anticipation builds for both the Bank of England (BoE) and the US Federal Reserve (Fed) to deliver their upcoming monetary policy decisions. With both central banks hinting at a potential shift towards lowering interest rates, market sentiment has been cautious, contributing to subdued volatility in the cable.
As economic data from both the UK and the US continues to paint a mixed picture, forex traders are left with little clarity on which way the currency pair may break. This article provides a thorough analysis of the factors shaping GBP/USD, explores the most recent economic releases, and investigates what could drive price action in the coming weeks.
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### GBP/USD Weekly Performance
– GBP/USD traded in a relatively narrow range, with price action stuck between 1.2150 and 1.2250.
– Pound sterling was pressured by soft UK data and cautious comments from BoE policymakers.
– The US dollar saw only a muted response to fresh economic metrics, as traders await clearer signals from the Fed.
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### Key Developments Impacting GBP/USD
#### 1. **Central Bank Policy: BoE and Fed in Focus**
– **Bank of England:**
The BoE has consistently indicated that the next move in rates is likely to be down. However, policymakers remain wary of lingering inflationary pressures, especially in service prices and wage growth.
– **Federal Reserve:**
The Fed has pivoted to a data-dependent stance, pausing its tightening campaign but not committing to imminent rate cuts. Recent economic releases have been mixed, keeping expectations for a cut in flux.
– Both central banks have emphasized the need for clear evidence that inflation is sustainably returning to target levels before acting.
#### 2. **Economic Data Highlights**
– **United Kingdom:**
– **Inflation:** UK CPI for the latest month came in at 3.4%, still above the BoE’s 2% target but trending lower.
– **Employment:** Wage growth has begun to soften, but the unemployment rate remains low, suggesting a tight labor market.
– **Retail Sales and Growth:** Retail data was underwhelming, and Q1 GDP figures indicated only modest growth.
– **United States:**
– **Inflation:** The Core PCE price index, the Fed’s preferred gauge, was steady at 2.8%, showing slow but ongoing progress toward target.
– **Labor Market:** Non-farm payrolls beat expectations, but job openings and quit rates have started to cool.
– **Consumer Spending:** Remains resilient, giving the Fed some room to be patient.
#### 3. **Political Factors**
– **UK:** Political uncertainty is rising ahead of the next general election, likely to impact business and consumer confidence.
– **US:** The upcoming presidential election cycle is also contributing to cautious positioning in the USD.
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### Market Sentiment
– The broad consensus is that both central banks will cut rates before the end of the year, but the exact timing remains highly uncertain.
– Implied volatility in GBP/USD options markets remains low, reflecting the subdued trading environment and lack of clear direction.
– Positioning data from the CFTC shows a modest net short GBP bias but nothing extreme.
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### Technical Analysis
#### 1. **Short-term Range**
– **Support:**
– 1.2150: Recent swing low, serving as a near-term floor.
– 1.2100: Psychological support and a previous key level.
– **Resistance:**
– 1.2250: Capping gains for several sessions.
– 1.2330: The top of the recent consolidation zone.
#### 2. **Indicators and Momentum**
– The 50
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