GBP/USD oscillates in trading range below 1.2700 ahead of BoE rate decision
- GBP/USD consolidates in a yearly trading band of 1.2600–1.2800 in Thursday’s early Asian session.
- FOMC agreed unanimously to keep the rate steady for the fourth straight month.
- BoE is widely anticipated to hold interest rates steady at 5.25% on Thursday.
The GBP/USD pair remains confined within a trading range between 1.2600 and 1.2800 during the early Asian session on Thursday. The Bank of England (BoE) will announce the interest rate decision later in the day, which is widely anticipated to keep its monetary status quo. The major pair currently trades near 1.2678, gaining 0.04% on the day.
The Federal Open Market Committee (FOMC) agreed unanimously to keep the benchmark Federal Funds Rate between 5.25% and 5.5% for the fourth straight month. The committee will be patient to ensure that the lower inflation rate remains within the 2% target sustainably. Fed Chair Jerome Powell closed the door to the possibility of a rate cut in March, but the markets continue to judge the May FOMC meeting as the most likely for the Fed to start easing policy.
On the British Pound front, the BoE is widely anticipated to hold interest rates steady at 5.25% on Thursday. Nonetheless, investors will monitor the policy outlook and language for hints about future rate cuts. The labor market showed signs of rebalancing, but a vulnerable economic outlook could be a factor that will force BoE policymakers to discuss rate cuts. This, in turn, might exert some selling pressure on the GBP.
Looking ahead, the BoE monetary policy meeting and the BoE's Governor Bailey speech will be the highlights on Thursday. On the US docket, the weekly Initial Jobless Claims and ISM Manufacturing PMI will be released. The highly anticipated US Nonfarm Payrolls (NFP) will be due on Friday. The US economy is expected to add 180,000 jobs in January.