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- GBP/USD began the week on the right foot, awaiting Fed and BoE’s monetary policy decisions.
- Most analysts estimate the Fed would hike 75 bps in September’s meeting.
- GBP/USD Price Analysis: Remains downward biased, but a break above 1.1500 could shift the bias to neutral.
The British pound loses some traction against the greenback, after hitting a daily low at 1.1355, exchanges hands above its opening price by 0.04%, amidst a slightly positive market sentiment. During the week, the Bank of England, and the Federal Reserve, are expected to hike rates, with the BoE estimated to go 50 bps, while the latter has forecasts of 75 bps or even 100 bps.
The major began trading at around the 1.1400 figure. At the time of writing, the GBP/USD spot price is at 1.1401, clinging to the 1.1400 figure, in a thin trading session, due to the London holiday, in observance of Queen Elizabeth II’s funeral.
GBP/USD seesaws around 1.1400, with light calendars on Monday and Tuesday
US economic data released in September further emphasized the need for increasing interest rates. Most bank analysts estimate that Jerome Powell and Co would hike 75 bps, even though the Consumer Price Index (CPI) ticker is lower, yet remains above the 8% threshold. Contrarily, core inflation in the US surpassed the 7% YoY threshold, portraying a scenario of inflation broadening in the economy.
Worth noting that September’s Fed meeting will update the Summary of Economic Projections (SEP), and forecasts for 2025 will begin. Analysts at Deutsche Bank expect the Fed to hike 75 bps and also estimate that the Fed will update the Unemployment Rate towards 4.5%, as they aim to achieve a soft landing.
On the UK’s side, the Bank of England is expected to increase the Bank’s Rate by 50 bps on Thursday. Deutsche Bank analysts estimate the BoE’s terminal rate at 4%, a 150 bps upgrade, over their previous forecast.
What to watch
The UK economic docket is absent. On the US front, housing data would shed some light on the effects of higher interest rates.
GBP/USD Price Analysis: Technical outlook
From a daily chart perspective, the GBP/USD remains downward biased. During the day, the major dropped below the 1.1400 figure but fell short of registering a fresh 37-year low and reclaimed the 1.1400 figure. Traders should know that the Relative Strength Index (RSI) is registering higher lows, contrary to Sterling’s price action. Unless GBP/USD buyers reclaim the 1.1500 figure, the pair’s likely scenario is to remain range-bound, with central bank decisions looming.