30 July 2024, GBP/USD
GBPUSD:
On Monday, the GBP/USD pairing moved into the mid-range as traders await a double meeting between the Federal Reserve (Fed) and the Bank of England (BoE) later in the week. The Federal Reserve is anticipated to maintain its current interest rate on Wednesday, while markets are anticipating the first quarter-point rate cut from the Bank of England on Thursday.
Investors will be monitoring the upcoming Fed rate meeting on Wednesday for indications that the Fed is on course for a long-awaited rate cut when the Federal Open Market Committee (FOMC) convenes again in September. The market is generally anticipating a minimum of a quarter-point rate reduction on 18 September, with rates indicating a 90% probability of a 25bp rate cut and an aspiration for a 10% probability of a double rate cut, according to CME's FedWatch tool.
It is anticipated that the Bank of England will cut rates by a quarter point later this week on Thursday. However, the likelihood of this occurring remains uncertain, with the Monetary Policy Committee (MPC) forecast to vote 5 to 4 in favour of a 25bp rate cut. At the previous Bank of England rate meeting, the MPC voted 7 to 2 in favour of postponing a rate cut.
The US Non-Farm Payrolls (NFP) figures are also due for release on Friday. These are a key component of the Fed's employment mandate and investors will be hoping for a further deterioration in employment figures to push the Fed towards a new round of rate cuts in September. The ADP employment change data for July will be released on Wednesday and will serve as a predictor for Friday's NFP employment report, albeit with a shaky track record of accuracy.
Trading recommendation: We follow the level of 1.2850, if we consolidate above it, we take Buy positions, if it bounces back, we take Sell positions.
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