Ella 
In early Asian trading on Wednesday, GBP/USD remained below the 1.2700 mark. UK national housing prices for January are due to be released later on Wednesday ahead of the Federal Reserve’s monetary policy meeting. GBP/USD is currently trading around 1.2695, unchanged throughout the day.
The Fed is widely expected to keep interest rates unchanged for the fourth consecutive time at 5.25-5.50%. At the Fed’s December meeting, Fed officials expected three rate cuts in 2024. However, the meeting minutes showed that there is still an uncertain future for monetary policy. Traders have priced in a 50% chance of a rate cut at the next March meeting, the CME FedWatch tool showed.
In terms of sterling, the Bank of England (BOE) is likely to maintain the status quo on interest rates for the fourth consecutive time. Bank of England Governor Andrew Bailey said in December that there was “still some way to go” as the central bank did not see inflation returning to its 2% target until 2025. That said, economists expect the Bank of England to open the door to adjusting its strategy later this year.
Market participants will pay close attention to Wednesday’s Federal Reserve interest rate decision and press conference. Additionally, U.S. ADP employment changes for January will also be released. On Thursday, the Bank of England’s monetary policy meeting will take center stage. Traders will also be watching to see if the Bank of England changes its language that monetary policy will likely need to remain restrictive for an extended period.
