Sterling shrugs off GBP/JPY dip, steadies pre-Fed, BoE rate decisions
GBP/USD held steady near 1.2840 in early NorAm trading, shrugging off post-BoJ volatility in GBP/JPY, as traders awaited the Fed later in the day followed by Thursday's BoE rate decision, with the degree of dovishness by both central banks likely to tip the balance for sterling.
With the Fed expected to hold rates steady, traders will scrutinize comments by Chair Jerome Powell that could lend support to market bets on as many as three U.S. rate cuts this year.
Rate markets see a 65% chance of a BoE cut on Thursday, and rising expectations of easing this week have weighed on the pound recently, though support appears to be firm near 1.2829, the 50% Fib of 1.2613-1.3044, and ahead of natural big-figure support at 1.28.
Despite, the BoE's expected early start to accommodation, short-term rate futures are pricing a slightly less-dovish UK rate path relative to the U.S., which despite intermittent yaw is likely to keep the pound relatively firm versus the dollar barring an overly dovish BoE stance.
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GBP Chart: https://tmsnrt.rs/3LO5jQu
(Paul Spirgel is a Reuters market analyst. The views expressed are his own)
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