29 Juli 2024, GBP/USD
GBPUSD:
The Pound-Dollar pair is trading on a stronger note around 1.2875 in the early hours of European trading on Monday. The dollar's decline amid hopes of an interest rate cut by the US Federal Reserve (Fed) in September is providing some support to the major pair. The US Federal Reserve (Fed) interest rate decision will be published on Wednesday, no changes in the rate are expected.
Most analysts and traders expect the Fed to leave the interest rate unchanged at its next meeting on Wednesday. The U.S. Federal Reserve may signal this week that an interest rate cut is around the corner, although many expect it to hold rates steady until its next rate decision in September. Investors now see the first rate cut coming by mid-September, estimating a 100% Fed rate cut of at least a quarter percentage point by then, according to CME FedWatch Tool data.
Traders will also be watching the FOMC press conference closely for new stimulus. A dovish FOMC tone could undermine the US Dollar and create a tailwind for GBP/USD.
As for the British Pound, the Bank of England may cut interest rates at its August meeting on Thursday, which would be the first rate cut since 2020. Markets are predicting a 50% probability of a quarter-point rate cut on Thursday, although opinions are divided on whether the cut will happen now or at the next meeting in September.
Trading recommendation: Trade in the 1.2840-1.2885 channel on a bounce from the levels.
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