GBPUSD: SELL 1.3250, SL 1.3270, TP 1.3160 | 07 May 2025

GBPUSD:

GBP/USD broke its short-term losing streak, breaking the breakout and holding near 1.3300 to start the new trading week. Cable remains below recent multi-year highs, but price momentum has moved into a holding pattern ahead of key speeches from the Federal Reserve (Fed) and Bank of England (BoE).

The Fed is expected to keep interest rates unchanged for now, which is likely to draw fresh fire from the Trump administration, which remains determined to squeeze Fed Chairman Jerome Powell for an early rate cut. Labour and inflation indicators remain largely balanced, and the White House's crude and opaque trade policy has undermined hopes of a rate cut while the Fed remains committed to its mandate to rein in unemployment and price volatility.

Although the Fed is virtually guaranteed to hold rates this week, Fed Chair Powell's words will take on added weight for investors after Wednesday's Fed rate meeting. Markets are still hoping for a turn towards a new cycle of rate cuts, and traders will be sniffing around for any signs of ‘restraint’ from Fed policymakers.

As for the UK, another quarter point rate cut by the Bank of England is expected on Thursday. The Bank of England's Monetary Policy Committee (MPC) is expected to vote 9 to 1 in favour of a 25bps rate cut.

Trading recommendation: SELL 1.3250, SL 1.3270, TP 1.3160

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