- GBP/USD is likely to remain within a tight range on Tuesday amidst various signals.
- Expectations of a rate cut from the BOE are putting pressure on the GBP, limiting any upward movement as the USD sees a modest uptick.
- Dovish sentiment from the Fed is keeping USD Bulls cautious, which, in turn, supports the major currencies.
- Traders seem hesitant ahead of the crucial Fed and BOE policy meetings later this week.
The GBP/USD pair is currently hovering in a narrow band around the mid-1.3500s during the Asian session on Tuesday. There’s a bit of hesitance in finding a clear direction as traders await key data and central bank updates. It’s interesting, really—last Friday marked a significant peak, the highest in three years.
On Wednesday, UK consumer inflation data is due, which comes just ahead of an important BOE meeting on Thursday. Moreover, the U.S. Federal Reserve’s interest rate decision on Wednesday will likely influence the USD in the near term, acting as a significant catalyst for the GBP/USD pair.
In the meantime, expectations are building around a more aggressive rate cut from the BOE, especially since the UK economy contracted more than anticipated in April, which is acting as a headwind against the GBP. Plus, increasing geopolitical tensions in the Middle East are enhancing the safe-haven appeal of the dollar, further capping the GBP/USD advance.
Meanwhile, USD Bulls appear to be treading lightly, given the growing sentiment that the Fed might be resuming a rate-cutting cycle in September. It seems there’s also ongoing uncertainty tied to trade issues and fiscal matters in the U.S., both of which could be worth considering before making any significant moves regarding the USD. This environment potentially supports the GBP/USD pair.
