GBP/USD Forecast: Sterling Nears 1.2708 Before Fed & BoE Decisions This Week

The GBP/USD pair is currently consolidating near 1.2708 in anticipation of a significant week on the economic front, with pivotal decisions expected from the US Federal Reserve (Fed) and the Bank of England (BoE).

Financial markets are poised for a crucial week, with momentum expected to build on Wednesday. The consensus is that the Fed will maintain the current interest rate levels, yet the market eagerly awaits Fed Chairman Jerome Powell’s press conference for further cues.

Powell’s previously dovish stance was met with contrasting views from other Fed members, highlighting that no new economic projections will surface until the March session.

As per the CME Fed Watch Tool, the probability of a Fed rate cut stands at a knife edge, with a 50% chance of reducing 25 basis points at the upcoming meeting.

Meanwhile, speculators have bolstered their net-long positions in Sterling to $2.49 billion, signaling potential bullish expectations for the GBP/USD pair. However, there remains a balanced anticipation of a rate decrease by the BoE in May.

The Bank of England is scheduled for a rate decision on Thursday, with unanimous consensus forecasts suggesting a hold on rates. The bank’s economic projections and Governor Andrew Bailey’s press conference will be closely scrutinized.

The UK’s financial agenda is set to unveil the BoE Consumer Credit report. At the same time, the US will provide updates on the labour market through the JOLTS Job Openings and consumer sentiment via the CB Consumer Confidence report.

In the latest 4-hour timeframe, the GBP/USD pair is grappling with the pivot point at $1.2710, indicating a potential for directional bias confirmation. Resistance levels loom overhead at $1.27483, $1.27748, and $1.27998, delineating the hurdles for bullish advancement.

On the other hand, the currency pair finds cushioning with support at $1.26755, then subsequent floors at $1.26485 and $1.26104, which may stop any bearish slides.

The Relative Strength Index (RSI) sits at a neutral 48, suggesting a balance in market forces with no immediate bias towards overbought or oversold conditions. The 50-day Exponential Moving Average (EMA) subtly exceeds the current price at $1.27069, hinting at bearish sentiment.

The overall trend, currently constrained by these technical indicators and price levels, leans towards a neutral stance with a slight bearish inclination awaiting further market catalysts for direction.

Today’s bullish breakout above the $1.27166 level can trigger a buying trend, and vice versa.