GBP/USD hung up on Monday ahead of back-to-back central bank showings

• Fed and BoE both slated to make rate calls this week.
• Fed expected to hold, BoE forecast to cut rates 25 bps.
• US NFP jobs report looms ahead on Friday.

GBP/USD pulled into the midrange on Monday as Cable traders brace for a double-header of rate calls from both the Federal Reserve (Fed) and the Bank of England (BoE) later in the week. The Fed is broadly expected to hold steady on rates one more time on Wednesday, while markets are hoping for a first quarter-point rate cut from the BoE on Thursday.

Forex Today: Flash GDPs in Europe and US jobs in the spotlight

The Fed’s upcoming rate call on Wednesday will be closely watched as investors look for signs that the Fed is on pace to deliver a hotly-anticipated rate cut when the Federal Open Market Comittee (FOMC) convenes again in September. Markets are broadly anticipating at least a quarter-point rate cut on September 18, with rate markets pricing in 90% odds of a 25 bps trim and hopeful 10% bets for a double-cut according to the CME’s FedWatch Tool.

The BoE is broadly expected to deliver a quarter-point rate trim later this week on Thursday, but odds are still up in the air with the Monetary Policy Committee (MPC) forecast to vote 5–to-4 in favor of a 25 bps rate cut. At the BoE’s previous rate meeting, the MPC voted 7-to-2 in favor of keeping rate cuts on hold.

US Nonfarm Payrolls (NFP) are also due on Friday. They are a key component of the Fed’s employment mandate, and investors will be looking for a continued cooling in hiring figures to help push the Fed into a new rate-cutting cycle in September. ADP Employment Change figures for July will be published on Wednesday and will serve as a forecast for Friday’s NFP jobs report, albeit a shaky one with a spotty track record for accuracy.

GBP/USD technical outlook

Cable explored the low side on Monday, dipping into a fresh two-week low of 1.2807, but GBP bidders are still not ready to let the pair slip below the 1.2800 handle. The pair is holding north of the 50-day Exponential Moving Average (EMA) at 1.2787, with price action still pinned into the bullish side of the 200-day EMA at 1.2651.

GBP/USD punched in a fresh 12-month high the week before last, but a lack of bullish momentum has dragged bids back down and the pair has pared back -1.82% top-to-bottom. Significant headwinds from the 1.3000 handle are keeping bullish action on the low side, and it won’t take much for sellers to form a cluster and push Cable below the last swing low and challenge the 1.2600 handle.

GBP/USD daily chart