Sterling traded little changed at 1.3365 as traders awaited Wednesday's expected Fed rate hold and and a cut from the BoE on Thursday rate cut, which kept cable tethered to its 10-DMA at 1.3340 and supported by the rising 21-DMA at 1.3263.

Resistance is just above 1.34 and then ahead of the 2025 high at 1.3445 put in on April 28.

The apparent easing of U.S.-China trade tensions has facilitated the market's shift in focus to monetary policy. With traders confident that the Fed will hold and the BoE will cut 25bp, market participants will scrutinize the post-meeting commentary for clues about the banks' rate paths.

Short-term rate futures are discounting a slightly more dovish path into year-end for the UK -- with 95bp in BoE cuts versus 79bp of Fed easing. This configuration should push GBP/USD lower if tariff concerns continue to abate.

Though that is only a 16bp difference, a change in tone by either central bank in their post-decision pressers could knock GBP/USD out of its current range.

Current sterling net spec positioning is long GBP at 24k contracts, or $2bn. A dovish shift by the BoE could break current support by the 21-DMA, opening the way for a dip to the 30-DMA at 1.3158 and firmer support at 1.3079 the 50% Fib of 1.2717-1.3445.
GBP Chart:


(Paul Spirgel is a Reuters market analyst. The views expressed are his own)