GBPUSD Outlook: Monetary Policies in Focus

Key Events

GBP CPI and Core CPI y/y on Wednesday
Fed Rate and FOMC Meeting on Wednesday
BOE Monetary Policy on Thursday
GBP Retail Sales on Friday

Source: CME Fed Watch Tool The key event driving market sentiment this week is the highly anticipated Fed rate decision. With a 67% market expectation for a 50bps rate cut, markets are looking for an aggressive start to the easing cycle. However, uncertainties remain as inflation hasn't yet aligned with target levels, the labor market is showing resilience, and the services sector remains strong. These factors raise questions about the likelihood of a rate cut exceeding 25bps. GBPUSD Q2

As for the British pound, market consensus leans toward a rate hold in Thursday's BOE meeting, reflecting the BOE's cautious approach to monetary easing. However, recent labor market data showing a significant drop in claimant count from 102.3k to 23.7k, combined with stagnant GDP growth (0.0% monthly change), opens the door for a more dovish statement and outlook from the BOE for the remainder of the year.

Technical Outlook

GBPUSD Outlook: GBPUSD – Weekly Time Frame – Log Scale

Source: Tradingview

After correcting from its 1.3266 high, GBPUSD found strong support at the upper boundary of its 15-year consolidation near the 1.30 level, reinforcing its positive breakout.

On the upside, a move above the recent 1.3266 high could face resistance around the 2009 lows, between 1.3430 and 1.3770.

On the downside, a break back inside the consolidation below the 1.30 level could see support at 1.29-1.2890 and 1.28 before signaling a potential bearish shift within the broader consolidation pattern.

--- Written by Razan Hilal, CMT – on X: @Rh_waves

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