GBP/USD Pair Attracts Fresh Sellers Ahead of the FOMC and the BoE Meetings

The upside rise on the GBPUSD seems to have lost momentum, but given the important risk events that lie ahead, the move may simply be the result of market participants repositioning themselves in advance of the upheaval. Speaking specifically about the statistics, the Federal Reserve’s favoured inflation indicator, Personal Consumption Expenditures Price Index (PCEPI), matched the market forecast of 4.4% year on year growth rates, while the monthly number increased to 0.3% opposed to the anticipated 0.2%. Before that, the first estimate of the US fourth quarter gross domestic product released by the US Bureau of Economic Analysis (BEA) showed an annualised growth rate of 2.9% as opposed to the 2.6% anticipated. In the same vein, the Durable Goods Orders increased by 5.6% in December, above the market expectation of 2.5% and the previously reported downward revision of 1.7%.

Rate increases of 25 basis points are anticipated from the Fed, while 50 basis points are predicted from the BoE as it tackles persistent inflation. But the most important indicator will be what Fed Chair Powell and BoE Governor Bailey have to say about the future course of rate hikes. Chancellor Jeremy Hunt’s lack of judgement on tax cuts and the financial effects of the worker’s strike are currently complicating the UK economy further. In addition, Chancellor Hunt warned PM Sunak about the difficulty of lowering inflation below the 5% threshold in 2023.

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