Market Analysis

The Pound Sterling (GBP) is trading within a narrow range around 1.2850 against the US Dollar (USD) during Tuesday’s London session. The GBP/USD pair remains within Monday’s trading bounds as market attention shifts to upcoming interest rate decisions by the Federal Reserve (Fed) and the Bank of England (BoE) later this week.

The Fed is expected to keep rates unchanged for the eighth consecutive meeting. Investors will be closely watching the monetary policy statement and Fed Chair Jerome Powell’s press conference for indications about potential rate cuts.

Experts predict that the Fed may signal a strong likelihood of rate cuts in September due to significant progress in reducing inflation towards the 2% target and growing concerns about labor market strength. Such a scenario would likely be negative for the US Dollar and bond yields. Currently, the US Dollar Index (DXY), which measures the Greenback’s value against six major currencies, is slightly higher at 104.70, and 10-year US Treasury yields are near 4.18%.

Later today, investors will look to the US JOLTS Job Openings data for June, set to be released at 14:00 GMT. The report is expected to show a decrease in job vacancies to 8.03 million from the previous 8.14 million.

This week’s economic releases, including ADP Employment Change, ISM Manufacturing PMI, and Nonfarm Payrolls (NFP) for July, will also influence the US Dollar’s next move.

Technical Analysis: GBP/USD Near 1.2850

The Pound Sterling is experiencing a mean-reversion move toward the lower boundary of the Rising Channel pattern on the daily chart. The GBP/USD pair has declined after falling below the significant support level of 1.2900. The pair is trading below the 20-day Exponential Moving Average (EMA) near 1.2860, indicating near-term trend uncertainty.

The 14-day Relative Strength Index (RSI) is approaching 40.00, which may act as a support level for the momentum oscillator.

Paraphrasing text from "FX Street" all rights reserved by the original author.