GBP/USD sticking close to 1.24 in the calm before the Fed & BoE storm

  • GBP/USD stuck near major psychological level with dual central bank rate calls in the barrel.
  • Heavily-populated economic calendar for this week promises plenty of volatility.
  • Lopsided rate calls could see the currency pair twist into the midweek.

It’s a heavy showing for the GBP/USD pair this week with both the Federal Reserve (Fed) and Bank of England (BoE) on-deck with interest rate calls slated for the midweek, and the Pound Sterling (GBP) is jostling for position against the Greenback (USD) as investors gear their positioning.

The Fed is broadly expected to hold rates steady 5.5% at the upcoming Federal Open Market Committee (FOMC) meeting on Wednesday at 18:00 GMT, while the BoE is forecast to give one last 25-basis-point rate hike, bringing the UK’s main rate to 5.5% from 5.25%.

The BoE’s rate call is slated for 11:00 GMT on Thursday.

Plenty of US & UK data on the economic calendar

It’s a bumper week for the GBP/USD on the economic calendar. For the UK, Consumer Price Index (CPI) numbers print on Wednesday, BoE Thursday, and Friday sees Retail Sales and Preliminary Purchasing Manager Index (PMI) figures.

United Kingdom (UK) CPI figures on Wednesday are expected to increase from -0.4% to 0.7%, while Friday’s Retail Sales for August are likewise forecast to bump to 0.5% after the previous month’s 1.2% decline.

On the United States (US) side of the data docket, Wednesday’s Fed showing will be followed by employment figures on Thursday and the Preliminary PMI printing on Friday. 

Thursday’s Initial Jobless Claims for the week into September 15th and the Philadelphia Manufacturing Survey for September are scheduled for 12:30 GMT. Initial Jobless Claims last printed at 220K, and the manufacturing survey is expected to decline 0.7% versus the last showing of 12.

Friday’s preliminary PMI numbers, scheduled for 13:45 GMT, are broadly expected to show a minor slip, with the manufacturing PMI forecast to tick down to 47.8 from the previous 47.9, and the services sector PMI is forecast to move slightly lower from 50.5 to 50.3.

GBP/USD technical outlook

On the technical side, the GBP/USD is knocking sideways in early week trading. The pair opened the week near the 1.2400 handle and has so far struggled to find momentum. The intraday action sees a sideways skid between 1.2400 and 1.2380. 

The GBP/USD has closed red or flat for eight of the past nine consecutive weeks from early July’s peak of 1.3142, and Daily candlesticks see the pair decidedly bearish, slipping just below the 200-day Simple Moving Average (SMA) currently parked near 1.2433. 

The 34-day Exponential Moving Average (EMA) has turned bearish into the 1.2600 major level, and as long as markets remain on-balance traders will want to keep an eye on the Relative Strength Index (RSI) and Moving Average Convergence-Divergence (MACD) indicators, both of which are flashing oversold conditions on daily candlesticks.

GBP/USD daily chart

GBP/USD technical levels