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- GBP/USD struggles to gain any meaningful traction at the start of a new week.
- Aggressive Fed rate cut bets cap the recent USD move up and support the pair.
- The GBP bulls seem reluctant ahead of the BoE policy meeting on Thursday.
The GBP/USD pair kicks off the new week on a subdued note and oscillates in a narrow trading band around the 1.3260-1.3265 area, near a one-week low touched during the Asian session.
The US Dollar (USD) remains on the defensive below a multi-week top amid heightened economic uncertainty on the back of US President Donald Trump’s tariff plans and turns out to be a key factor acting as a tailwind for the GBP/USD pair. Adding to this, the prospect of more aggressive policy easing by the Federal Reserve (Fed) further seems to undermine the Greenback.
Despite the better-than-expected release of the US Nonfarm Payrolls (NF) report on Friday, investors seem convinced that the US central bank will resume its rate-cutting cycle in June and lower borrowing costs by 100 basis points by the end of this year. This, along with the optimism over the potential de-escalation of the US-China trade war, dents demand for the safe-haven buck.
Traders, however, seem reluctant to place fresh bullish bets around the GBP/USD pair and opt to wait for this week’s key central bank event risk – the Bank of England (BoE) monetary policy meeting on Thursday. The UK central bank is widely expected to cut interest rates by 25 bps and adopt a slightly dovish stance amid downside risks to growth from the trade war.
Apart from this, traders this week will take cues from the outcome of the crucial two-day FOMC policy meeting on Wednesday, which will influence the USD price dynamics and provide some meaningful impetus to the GBP/USD pair. In the meantime, Monday’s release of the US ISM Services PMI will be looked upon to grab short-term opportunities later during the early North American session.
