**GBP/USD Weekly Forecast: Range-Bound Ahead of BoE, Fed Cut Decisions**
*By Yohay Elam, ForexCrunch.com*
**Overview of the Recent GBP/USD Performance**
The British Pound staged a modest recovery against the US Dollar during the recent trading week, with GBP/USD hovering close to the psychologically important 1.2700 mark. The pair showed resilience in the face of mixed economic data from both the United Kingdom and the United States, stemming some of the sharp declines witnessed in earlier sessions.
Traders are now bracing for a potential period of consolidation, with the GBP/USD pair likely to stay range-bound in the coming week. The spotlight will be firmly fixed on the upcoming interest rate decisions from the Bank of England (BoE) and the US Federal Reserve (Fed). Markets are keenly observing whether either central bank will opt for a rate cut, and if not, the language officials use to guide future policy expectations.
**Recap: What Moved GBP/USD Last Week**
*Economic Data Highlights:*
– UK jobs market continued to show signs of softening, as wage growth moderated but remained at elevated levels.
– UK inflation data surprised to the upside but was not strong enough to alter expectations that the BoE’s tightening cycle is complete.
– Retail sales in the UK slightly rebounded after recent weakness, lending some support to sterling.
– In the US, Federal Reserve officials signaled a cautious approach, keeping rate cut hopes alive for later in the year.
– US GDP figures came in softer than expected, sparking some USD weakness, but not enough to spark a sustained downtrend.
– Risk sentiment seesawed in line with global headlines, particularly around China and ongoing geopolitical tensions, but GBP/USD kept to a relatively narrow trading range.
**Technical Analysis: GBP/USD Set for Consolidation**
Looking at the daily chart, GBP/USD has established a well-defined range with support sitting just below 1.2600 and resistance forming around 1.2800. Momentum indicators such as the Relative Strength Index (RSI) suggest the currency pair is neither overbought nor oversold, pointing to a period of sideways trading.
*Key Technical Levels to Watch:*
– Support at 1.2650: A downside break could open the way to 1.2590.
– Resistance at 1.2790: Bullish momentum above this level would target 1.2850.
– 50-day moving average currently aligns with the mid-range, reinforcing the likelihood of continued consolidation.
– RSI and MACD are flat, indicating no clear trend direction.
**Fundamental Drivers: Central Banks in Focus**
*Bank of England (BoE):*
– The BoE meets amid growing speculation about the timing and extent of its first rate cut.
– UK inflation, though retreating, is still higher than other advanced economies, supporting the case for a “wait-and-see” approach.
– While there is no consensus for an imminent rate move, the statement and policy minutes will be scoured for dovish or hawkish shifts.
*Federal Reserve (Fed):*
– The Fed is also unlikely to change rates at its upcoming meeting, with markets pricing in potential rate cuts later in the year.
– Recent US data has been mixed, leaving officials room to be patient, but any hint of a dovish bias could weigh on the greenback.
– Focus will be on Chair Jerome Powell’s press conference and the Summary of Economic Projections.
*Potential Scenarios for GBP/USD:*
1. **BoE holds rates; Fed signals cuts sooner:**
– GBP/USD could break higher, testing 1.2800 and beyond.
2. **Both central banks stay cautious:**
– Likely to see continued range-bound trading, with both currencies lacking clear direction.
3. **Surprise hawkish BoE or Fed stance:**
– Any hawkish tilt from either central bank could trigger volatility, but with the
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