**GBP/USD Weekly Forecast: Range-bound Trading Ahead of BOE, Fed Policy Cut Decisions**
*By Yohay Elam, ForexCrunch.com*
The pound-to-dollar (GBP/USD) pair has continued trading in a relatively tight range as investors weigh critical upcoming monetary policy decisions from the Bank of England (BOE) and the US Federal Reserve. The upcoming weekly stretch may be decisive for the currency pair, with market participants keenly focused on the probability and timing of interest rate cuts from both major central banks. With inflation readings easing but growth signals diverging between the UK and US, GBP/USD is likely to remain range-bound unless detonated by surprises from policymakers.
## Strong Dollar Narrative Faces Scrutiny
Over the past several months, the US dollar has garnered strength thanks to the US economy’s comparative resilience and the Federal Reserve’s cautious stance on rate cuts. US jobs reports, retail sales, and inflation metrics have consistently topped forecasts, reinforcing market conviction that the Fed would hold rates higher for longer.
However, recent data has begun to challenge this narrative:
– US CPI inflation rates have shown signs of cooling.
– Labor market indicators, including job openings and wage growth, suggest moderation.
– The Federal Reserve’s preferred gauge, core PCE, is trending toward the bank’s 2 percent target.
Given these trends, traders are increasingly contemplating a more imminent pivot to rate cuts, potentially as soon as September, from the Federal Reserve.
## UK Growth Headaches Offset Disinflation Progress
On the UK side, the Bank of England has also succeeded in taming inflation, prompting shifts in market expectations for a near-term rate cut. Consumer price index data indicated that annual headline CPI dropped, and core inflation also moved closer to the target.
On the growth front, however, the UK outlook remains fragile:
– GDP stagnated in Q1, and business sentiment surveys are lackluster.
– The labor market, though tight, has started to show softening signs.
– Real incomes remain under pressure, deterring consumer spending.
While the BOE was slow to acknowledge waning inflation, traders are now pricing in a growing probability of a policy move, possibly as early as August, but more likely in September.
## Central Bank Policy Watch: Key Dates
The pivotal factor for GBP/USD direction is the relative pace and scale of expected monetary easing by the BOE and Fed. The upcoming central bank meetings include:
– **Bank of England Meeting:** August 1, with policymakers now in their pre-meeting blackout period.
– **Federal Reserve Meeting:** July 31, preceding the BOE by only one day.
For both banks, a clear signal or surprise move on interest rates could disrupt the current range-bound GBP/USD trading.
## GBP/USD: Technically Range-Bound
From a technical analysis viewpoint, GBP/USD has been oscillating within established support and resistance boundaries, demonstrating classic range-bound behavior as traders await a directional catalyst.
### Key Technical Levels:
– **Resistance:** 1.2800 area, coinciding with recent swing highs.
– **Support:** 1.2610-1.2630 band, held on multiple tests over the past weeks.
– **Pivot Zone:** 1.2700 serves as an interim level, often acting as a magnet during low-volatility stretches.
Momentum indicators (like RSI and MACD) are largely neutral. Volatility has subsided, and volume indicators suggest the market is content to wait on clarity from central banks.
## Economic Calendar: Upcoming Releases Impacting GBP/USD
The next week’s economic schedule offers multiple high-impact events from both the UK and US that could affect GBP/USD, including:
### UK Data:
– **PMI Reports:** Updates for manufacturing, services, and composite indices, offering a snapshot of economic activity.
– **Employment Data:** Jobless claims, wage growth, and unemployment rate figures will be closely scrutinized for signs of labor market deterioration or resilience.
– **Retail Sales:** Spending data may
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