GBPUSD:
Sterling softens against the dollar ahead of the Fed decision as some investors take profit after recent attempts to rally. The U.S. market still anticipates a 25 bps rate cut, but the dollar’s intraday recovery into the meeting weighs on GBPUSD.
Domestic drivers for the pound are mixed. Recent UK inflation data came in softer than forecast, reinforcing expectations that the Bank of England will approach policy with greater caution and limiting GBP upside. Budget and borrowing headlines earlier in the year also added volatility, keeping the pair around 1.33 and below at times.
Also yesterday, the prevailing assessment was that the GBP/USD upside momentum was unstable and largely dependent on external drivers—the US dollar exchange rate and expectations for further Fed easing. Under these conditions, selling on a rise toward 1.3275, with an eye on a return to 1.3200, should the Fed remain neutral or moderately cautious, makes strategic sense.
Trade recommendation: SELL 1.3265, SL 1.3285, TP 1.3200
Origin: FreshForex
