Anna 
In Monday’s European session, the Pound Sterling (GBP) is displaying a lackluster performance, with the GBP/USD pair trading in a narrow range near 1.2700. Investors appear to be on the sidelines, awaiting the upcoming interest rate announcements from both the Bank of England (BoE) and the Federal Reserve (Fed) later in the week.
The GBP/USD pair’s limited movement suggests that traders are holding back on making significant bets until after the central banks’ policy decisions are unveiled. The focus is primarily on the BoE, where expectations are for the central bank to maintain interest rates unchanged at 5.25%. This would mark the fourth consecutive meeting with no change in rates. The decision comes at a time when core inflation in the United Kingdom is more than double the desired rate of 2%.
Investors are keenly anticipating the BoE’s interest rate outlook, especially as the central bank faces challenges in managing inflation that has proven to be more stubborn than expected. The looming threat of a technical recession adds complexity to the decision-making process. The deepening cost-of-living crisis has significantly impacted consumer spending, raising concerns about the potential for a recession. The BoE’s guidance will be closely scrutinized, with the risk of an economic downturn increasing if the central bank delivers a hawkish stance.
The GBP/USD pair is expected to experience more decisive movements as the week progresses, driven by the outcomes of the BoE and Fed interest rate decisions. Traders will carefully analyze the guidance provided by both central banks to gauge their stance on economic conditions and potential policy adjustments in the near term.
