Skip to content

CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Market update: GBP/USD holds above 1.2600, as the Fed’s meeting for the year nears

GBP/USD maintains its broad range ahead of a hectic week, with the Fed and BoE's meetings in focus. As no changes are expected, their statements will drive trading activity.

Source: Bloomberg

The British pound has been confined to a clear trading range against the US dollar since mid-December, holding steady as the market anticipates the Federal Reserve's first monetary policy statement of the year.

The Fed is coming up on Wednesday, with the Bank of England’s own interest-rate decision due just a day later. Neither central bank is expected to alter its policy settings, but the meat for markets will lie in how ready they seem to do so later this year. The US central bank has so far tamed inflation more successfully than the British, but there are signs everywhere that prices are coming back under control. This could even be the first policy conclave since 2011 that sees no UK rate-setter voting for tighter credit. Could one (or more) even lean toward a cut? Probably not yet, but it’s possible.

The major risk would seem to be that both central banks disappoint in terms of apparent eagerness to ease rates. They might. The US economy is still expanding at a reasonable clip, according to most recent data. The UK is still weaker, with inflation much further above target. The case that neither is crying out for lower rates now can still be made. Still, there may not be much movement for GBP/USD unless this disappointment is skewed toward one of the central banks. The decision to hold rates is now well in the price. All the market can do is wait.

GBP/USD technical analysis

The pound is stuck in a range effectively between late December’s 1.28247 top and the first Fibonacci retracement of the rise to that four-month peak from the lows of early October. That comes in at 1.26365.

There also appears to be quite strong support below that at the 1.26 psychological level. The market has bounced there twice in the past month. If sterling bulls are going to make another attempt at the range top, they’ll need to retake January 24’s intraday top of 1.27764, a level which hasn’t been approached since.

While it doesn’t look as though they have the momentum to try that just yet, it’s notable that GBP/USD is range trading at a relatively high level by recent standards. This makes fundamental sense, of course, as the Fed is expected to cut rates earlier and deeper than the BoE. If the market comes out of this week’s meetings with the same impression, the pound could rise sharply.

GBP/USD daily chart

Source: TradingView

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Explore the markets with our free course

Discover the range of markets you can trade CFDs on - and learn how they work - with IG Academy's online course.

Turn knowledge into success

Practice makes perfect. Take what you’ve learned in this forex strategy article, and try it out in your demo account.

Ready to trade forex?

Put the lessons in this article to use in a live account. Upgrading is quick and simple.

  • Trade over 80 major and niche currency pairs
  • Protect your capital with risk management tools
  • Analyse and deal seamlessly on smart, fast charts

Inspired to trade?

Put the knowledge you’ve gained from this article into practice. Log in to your account now.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.