Sterling is in a consolidation phase that can extend unless central banks provide game-changing guidance, which is unlikely given lingering uncertainty about the post-pandemic recovery. Fading the 1.3780-1.4010 March range with tight stops, rather than looking for a range break, could provide value.
Initial event risk lies in Tuesday's U.S. retail sales data, forecast to fall 0.5% month-on-month after jumping 5.3% in January.
The FOMC meeting which concludes on Wednesday is the major event risk, with the improved economic outlook to be reflected in forecasts and dot plots, but Federal Reserve Chairman Jerome Powell expected to continue sounding dovish nL1N2L82OT. Treasury yields and the dollar will respond if there is significant deviation from expectations.
On Monday, Bank of England Governor Andrew Bailey essentially previewed the policy decision this Thursday, when no change in rates is expected. He was more positive on the economy, saying it should be back at pre-pandemic levels by year-end, as the vaccine rollout progresses, while remaining cautious over the impact of COVID-19 nL8N2LD1TW.
GBP/USD charts are neutral, as momentum studies, 5, 10 and 21 daily moving averages flat-line. The range top is at 1.4010, 50% of the February-March fall, which capped on Friday; the 1.3787 lower 21-day Bollinger band is a good indicator of an oversold market, and the 1.3779 March low is the range base.
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