- GBP/USD wobbles around 1.3500 as the US Dollar consolidates in the countdown to Fed-BoE policy announcements.
- The Fed is expected to warn of upside inflation risks after leaving interest rates unchanged.
- Investors expect the BoE to hold interest rates steady at 3.75%.
The GBP/USD pair is broadly sideways around 1.3500 during the European trading session on Wednesday. The Cable consolidates as investors await monetary policy announcements by the Federal Reserve (Fed) and the Bank of England (BoE).
The Fed is anticipated to leave interest rates unchanged in the range of 3.50%-3.75% in its monetary policy announcement at 18:00 GMT, according to the CME FedWatch tool. In the monetary policy statement, the Fed is expected to warn about de-anchored inflation projections and growing economic risks amid higher oil prices due to prolonged Strait of Hormuz closure.
Ahead of the Fed’s policy meeting, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% higher to near 98.70.
On Thursday, the BoE is expected to hold interest rates steady at 3.75%, with an 8-1 majority. In an event at the International Monetary Fund (IMF) this month, BoE Governor Andrew Bailey said the war has resulted in a “big negative shock” to the economy; however, there is no rush for any monetary policy adjustment.
GBP/USD technical analysis
GBP/USD trades flat at around 1.3500, holding a modest bullish bias as it sits above the 20-day Exponential Moving Average (EMA) at 1.3470 and the 38.2% Fibonacci retracement at 1.3432.
The Relative Strength Index (RSI) at 55.4 leans slightly positive, suggesting buyers retain the upper hand while upside traction remains gradual.
On the topside, immediate resistance is aligned at the 50.0% Fibonacci retracement at 1.3515, with further barriers at the 61.8% level at 1.3599, followed by 1.3718 and 1.3870. On the downside, initial support is seen at the 20-day EMA at 1.3470, ahead of the 38.2% retracement at 1.3432; a deeper pullback would expose the 23.6% level at 1.3328 and the structural floor near 1.3161.
