GBPUSD: Fed & BOE Meetings In Focus
GBPUSD Testing Key Resistance
GBPUSD continues to push into higher territory this week with the pair now pushing up against 1.3017-level resistance. With the FOMC tomorrow and the BOE meeting on Thursday, there is plenty of volatility risk in the coming sessions with bulls hoping for a combination of Fed dovishness and BOE hawkishness to drive the rally further. The pair is now up more than 7% off the YTD lows, largely as a result of a weaker USD in recent weeks as traders have shifted their outlook on the Fed. An uptick in near-term easing expectations has put pressure on the Dollar, feeding the recovery moves we’re seeing in GBP and across the FX space except for JPY.
FOMC Tomorrow
Looking ahead to the FOCM tomorrow, the Fed is expected to keep rates on hold though traders are looking for a signal that the time for further easing is fast approaching. The market is currently pegging June for the next cut. However, if we get a more dovish message from the Fed tomorrow (perhaps acknowledging tariff risks and the data downturn), pricing for a May cut could start to rise, leading USD down lower.
BOE on Thursday
On Thursday, the BOE is also expected to keep rates on hold. However, the accompanying guidance isn’t expected to be as dovish as the Fed’s. The bank has tried to push back against easing expectations recently, despite some softer data. The reaction in GBP will come down to how concerned the bank is over the risks around trade tariffs and fiscal developments in the eurozone. A more neutral message from the BOE and a more dovish message from the Fed would be the golden scenario for GBPUSD bulls this week while the inverse would likely see GBPUSD correcting lower from current highs.
Technical Views
GBPUSD
The rally in GBPUSD has seen price pushing back above the broken bull trend line and the 1.2685 level. Price is now testing resistance at the 1.3017 level and with momentum studies bullish, a break higher here is seen turning focus to 1.3246 next. If we correct lower, the bull trend line and 1.26875 level will be key support to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.