Sterling is expected to remain range-bound in the near term as traders brace for pivotal policy guidance from the Federal Reserve and the Bank of England.

While both central banks are widely anticipated to hold rates steady this week, the spotlight remains firmly on the post-decision rhetoric to determine the divergence in policy paths for the remainder of 2026.

Currently, futures markets are pricing in a steady Fed through year-end.

The BoE is facing mounting pressure to combat persistent inflation, and UK short-term futures are discounting a 72% chance of a rate hike in June, with as much as 68bp of tightening priced in by the December MPC meeting.

From a technical perspective, GBP/USD exhibits a neutral-to-soft bias, with immediate support found near the recently bruised 100-day moving average at 1.3468 and the 21-day moving average at 1.3443, a breach below the 100-DMA could lead to a decline toward the 200-day moving average at 1.3416.

Conversely, while above these levels, the pair remains constrained by the daily cloud top, currently at 1.3544. A break above the daily cloud will put the April 17 trend high of 1.3599 and the rising upper 30-d Bolli at 1.3650 in focus.
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(Paul Spirgel is a Reuters market analyst. The views expressed are his own)