GBP/USD trickled lower in early U.S. trading, awaiting today's Fed and Thursday's BoE rate announcements, as traders remained reluctant to break away from resistance at short-term moving averages currently capped by the falling 30-DMA at 1.2180, with support just below 1.21.
With the central bank meetings, the news conferences will be a particular focus as markets attempt to discern policy plans going forward.
Though both central banks are taking a wait-and-see approach, the Fed is much further along in its fight against inflation, and the U.S. economy appears more robust than the UK's.
Despite the Fed's success diminishing inflation, Tuesday'sdata hinted inflation may be stickier than thought, potentially pushing expected Fed rate cuts in H2 2024 further out and boosting the dollar.
The BoE on the other hand, remains wary of low growth and recession even as UK inflation, core and headline, hold above 6%.
Thursday's expected hold is meant to alleviate downward pressure on the UK economy.
If the BoE's pivot proves premature recent lows sub-1.21 are likely to give way, putting March 2023 lows by 1.18 in focus.
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