Ella 
In the Asian market on Monday, the pound/dollar rose after falling, but there was a lack of follow-up and it remained within the shock range of the past two weeks or so. GBP/USD is currently trading around the 1.2700 mark, with little movement throughout the day as traders await fresh catalysts before placing positions on a firm near-term trend.
Therefore, with the timing of the first rate cut still uncertain, market focus remains on the outcome of the high-profile two-day U.S. Federal Monetary Policy Committee (FOMC) monetary policy meeting starting on Tuesday. Data released on Friday showed U.S. inflation rose slightly in December, reaffirming expectations that the Federal Reserve will cut interest rates in mid-2024. That said, a surge in spending fueled by strong growth in personal income, coupled with strong fourth-quarter U.S. gross domestic product, suggests the economy remains in good shape. This, in turn, raised concerns that the Federal Reserve (Fed) may adopt more aggressive easing policies, thus becoming a “tailwind” for the US dollar (USD), and the GBP/USD currency pair was also affected.
On top of this, broad weakness in equity markets has also helped the safe-haven pound hold near its highest level since December 13 hit last week. In other words, expectations of a soft landing for the U.S. economy are still weighing on U.S. bond yields and the dollar. Beyond this, expectations that a slight pick-up in the UK’s stagnant economy could delay the start of the Bank of England’s (BOE) easing policy cycle will also provide support for the pound (GBP) and continue to provide support for GBP/USD. However, the recent range-bound price action suggests that traders are uncertain about the next directional move in spot prices, and aggressive traders should proceed with caution.
