The GBP/USD pair has to navigate both the Fed rate decision on Wednesday, and the Bank of England decision on Thursday.
GBP/USD
From Daily Forex, this is Christopher Lewis taking a look at the British pound. The British pound has gone back and forth during the trading session here on Tuesday as we are dancing around just below the 200-day EMA.
The 200-day EMA, of course, is an indicator that I think a lot of people will be watching. If we could break above there, then it opens up the possibility of a move to the 50-day EMA.
But the biggest problem that I think we have right now is that the Federal Reserve has an interest rate decision on Wednesday and a statement and a press conference, while the Bank of England has one on Thursday. Neither are expected at this point in time to really make major changes. Because of this, the choppiness will probably continue, although the well defined range also provides a potential trading opportunity for those who are nimble.
Central Bank Decisions Loom Large
The reality is that traders are looking at this through the prism of what do the central bankers have to say. After all, this is a market that I think, given enough time, will have to make a bigger decision, but as things stand right now, this looks very much like a sideways market.
I do believe ultimately that when we see this market make a breakout of this 250-pip range, it will probably be a bigger move. Both banks are going to have to worry about sticky inflation, so I think we continue to bang back and forth. So, look at this as a 250-pip market and trade accordingly until proven differently, and take advantage of extremes until proven otherwise.