BOE

Harris replacing Biden may not be a radical overhaul where policies are concerned, but it has certainly brought the Democrat’s prospects for maintaining power back from the brink of death. From a market perspective, it means Trump is no longer a ‘walk in’ President, and political headlines from the US are no longer driving sentiment for now. Thankfully, we have intertest rate decisions from the FOMC, BOE and BOJ to drive sentiment, along with NFP and Australia’s CPI report for good measure.

The GBPUSD has dipped below the crucial 1.29 level ahead of this week's final wave of volatility surrounding US GDP and Core PCE data, and in anticipation of next week’s BOE and Fed monetary policy decisions. Will bearish pressures continue?

The MPC voted 7-2 to hold rates, with Dhingra and Ramadan again voting to cut rates. But the fact that this decision was "finely" balanced means the balance could shift towards a cut should economic conditions deteriorate, or inflation does not accelerate again.

The FTSE moved moderately higher after the UK’s inflation rate fell to the Bank of England’s 2% target ahead of for the central bank’s rate section on Thursday.

The GBP/USD forecast is in focus, with the upcoming Bank of England rate decision, UK CPI, retail sales from both sides of the pond and global PMI data all on tap this week. Plus, there is the added uncertainty from the upcoming UK general election.

For the first week in a while, US data is not dominating the market focus. With a key US inflation report and FOMC meeting freshly in the rear-view mirror, markets can now shift attention to domestic data. Three top-tier central banks meet next week, including the RBA on Tuesday, followed by the Swiss National Bank (SNB) and Bank of England (BOE) on Thursday. UK inflation data on Wednesday could set the tone for what to expect at future BOE meetings. Flash PMIs across Asia, Europe, and the US then close out the week, which can shape expectations for future growth and inflationary pressures.

GBPUSD Analysis: with the upcoming BOE statement, CPI metrics, and Flash PMI results, April highs are challenged for further bull runs

GBP/USD slipped last week on a moderately dovish BOE – what should traders be watching this week?

GBP/USD is the weakest US dollar cross after this morning’s cooler-than-expected UK CPI report - see what it means (and doesn't mean) for the BOE!

GBP/JPY is on the cusp of breaking to fresh multi-year highs ahead of key inflation and employment data from the United Kingdom and Japan, making this a pair to keep on the radar over the next 48 hours.

The US dollar was lower across the board after traders digested the latest Fed meeting and are now focusing on four cuts this year, beginning in May. EUR/USD is just one of several pairs to form engulfing days against the US dollar.

So will GBP/USD outperform again, or is the outlook for 2024 more downbeat?

The FTSE eased off from earlier highs on not-so-dovish BoE hold. The key takeaway point is that there was no pivot, with the BoE warning that there's still some way to go on inflation front. This implies tight policy for longer. GBP/USD extends post FOMC rally as BoE's "finely balanced" decision saw three dissenters voted for 25bps hike.

We have arguably seen the biggest central bank surprise of the week, with the Fed’s dovish pivot. But that may also influence the tone of the SNB, BOE and ECB at their meetings today – even if only to a degree.

Four major central banks meeting next week including the FOMC, ECB, BOE and SNB. While no changes are expected, traders want to know who may be the first to cut rates.

Ahead of the Bank of England’s rate decision, the GBP/USD was holding steady near 1.22 handle, benefitting slightly from the dollar’s weaker response to what was a hawkish hold from the Federal Reserve rate decision. Not many people were expecting a rate hike from the BoE either, with the market attaching a 93% probability of a second consecutive hold after 15 back-to-back interest rate hikes.

With no change to BOE interest rates expected, GBP/USD traders will key in on the BOE’s vote split and economic forecasts.