Anna 
The British Pound (GBP) experienced a decline as investors adopted a cautious stance in anticipation of upcoming interest rate decisions from both the Bank of England (BOE) and the Federal Reserve (Fed) next week. While it is widely anticipated that both central banks will maintain their current monetary policies for the fourth consecutive time, the focus will be on the guidance provided regarding interest rates throughout 2024.
Bank of England policymakers are expected to refrain from discussing interest rate cuts, considering the persistently high inflationary pressures in the British economy, which surpass those in the United States. However, there is a possibility that policymakers may offer insights into potential future rate adjustments. The Summary of Economic Projections (SEP) from the Fed’s previous meeting revealed an average forecast of three interest rate cuts in 2024.
As the market awaits the Fed’s decision on interest rates, attention will be directed towards the core personal consumption expenditures (PCE) price index data for December, scheduled for release at 13:30 GMT. If the underlying inflation data remains elevated, Fed policymakers might underscore the possibility of a rate cut extending beyond the first half of 2024. The upcoming central bank decisions and the accompanying guidance will likely influence market sentiment and the trajectory of the British Pound in the near term.
