**GBP/USD Weekly Forecast: Range-Bound Ahead of BoE, Fed Cut Decisions**
*Based on analysis originally by Yohay Elam, Forex Crunch.*
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### Overview
In the week ahead, the British pound and US dollar pair (GBP/USD) are expected to remain confined within a relatively narrow range, as traders and investors adopt a cautious approach before pivotal central bank events. Both the Federal Reserve (Fed) and the Bank of England (BoE) are approaching potential changes in monetary policy, with markets speculating about the timing of their next moves—specifically, interest rate cuts. Market participants are closely monitoring economic indicators and policy signals, seeking confirmation and forward guidance from both central banks.
This forecast provides an in-depth analysis of current macroeconomic trends, technical levels, and market psychology impacting GBP/USD. It also examines key themes, including inflation trajectories, labor market adjustments, political uncertainties, and relative central bank positioning.
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### GBP/USD: Recent Performance Review
– The GBP/USD pair has experienced low volatility over the past several weeks, consolidating primarily between 1.2600 and 1.2800.
– Recent attempts to break out have been muted, with no significant catalyst strong enough to provide lasting directional momentum.
– Both the pound and the dollar have been pressured by similar concerns:
– Persistent but moderating inflation
– Signs of economic slowdown
– Uncertainties surrounding monetary policy path
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### Key Drivers Impacting GBP/USD
#### 1. Federal Reserve Policy Outlook
– The June Federal Open Market Committee (FOMC) meeting is now a primary focus for traders.
– The Fed has maintained a cautious stance, emphasizing persistent inflation concerns. Chair Jerome Powell and other officials have not confirmed a timeline for rate cuts.
– Recent US economic data—especially inflation and jobs figures—have shown some cooling, but not enough to compel immediate policy easing.
– Markets currently price in a high probability that the Fed’s first rate cut will be in September or later, pending more convincing evidence that inflation is returning to the 2 percent target.
#### 2. Bank of England’s Next Move
– The BoE holds its own policy meeting soon, with expectations also leaning toward a rate cut this summer.
– UK inflation is showing clear signs of moderation, particularly in headline and core readings. However, services inflation remains a persistent concern for policymakers.
– Labor market data has revealed some slack, with wage growth easing but still elevated by historical standards.
– The BoE is keen to avoid premature easing that could reignite inflation but also wary of overtightening in a fragile economic environment.
#### 3. UK Political Uncertainty
– UK politics may inject volatility into GBP. The ongoing leadership dynamics within the ruling Conservative party, and speculation about a possible early general election, are generating uncertainties.
– The outcome of upcoming by-elections and broader political narrative could influence business sentiment, investment flows, and, ultimately, the pound’s outlook.
#### 4. Technical Trends and Sentiment
– The GBP/USD daily chart signals indecision:
– The pair trades close to major moving averages and within a consolidation channel.
– RSI indicators are neutral, and momentum oscillators reflect the absence of clear direction.
– Market positioning across the forex community is moderately neutral, with no large bullish or bearish bets.
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### Economic Calendar: Weekly Highlights
**Next week’s data releases that could move GBP/USD include:**
– **UK Services and Composite PMIs:** These will provide insight into post-pandemic economic resilience and sectoral growth.
– **US Core PCE Index:** The Fed’s preferred inflation gauge. An upside or downside surprise could quickly shift expectations regarding US monetary policy.
– **UK Retail Sales:** Data will offer a read into UK consumer sentiment amid falling real incomes and persistent inflation.
– **US Non-Farm Payrolls (Upcoming):** Not this week, but incoming labor market data will remain key in shaping the dollar’s
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