Ella 
In early Asian trading on Tuesday, GBP/USD was still facing some selling pressure. GBP/USD was slightly boosted by a rise in the US dollar above 103.50 and rising US bond yields. Markets turned cautious ahead of central bank meetings including Federal Reserve (Fed) and Bank of England (BoE) interest rate decisions. At press time, GBP/USD was trading at 1.2726, down 0.02% on the day.
The Fed is expected to keep interest rates on hold for a fifth consecutive time at its March meeting on Wednesday, saying it still needs further evidence that inflation will sustainably return to its 2% target. Federal Reserve Chairman Jerome Powell said earlier this month that the central bank may lower its benchmark interest rate later this year, although continued progress in bringing inflation down to target is “unreliable.”
Traders will also be keeping a close eye on the press conference, which is unlikely to see a major shift. Still, policymakers are likely to reduce the number of rate cuts they expect this year to two from the previous three.
UK inflation, on the other hand, is receding but the Bank of England remains cautious until inflation rises to its target of 2%. The Bank of England is likely to keep interest rates unchanged at 5.25% on Thursday. Investors expect the Bank of England to start cutting interest rates in August, with one or two more cuts before the end of the year.
Later on Tuesday, the U.S. is to release data on building permits and housing starts. The focus will be on Wednesday’s Federal Reserve monetary policy meeting and press conference. Additionally, Fed officials will update their quarterly economic forecasts. In the UK, Thursday’s Bank of England interest rate decision will be the focus. In addition to the interest rate decision, Bank of England policymakers are also likely to provide clues about the outlook for inflation, economic growth and the labor market.
