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The GBP/USD pair is currently trading around 1.2700 as markets prepare for a lopsided Wednesday session with a US holiday and a fresh update on UK CPI inflation. The Bank of England’s interest rate call is expected on Thursday, and another rate hold is expected. Market sentiment was broadly pinned into the midrange on Tuesday, with Federal Reserve officials highlighting the Fed’s cautious stance as policymakers wait for further evidence of cooling inflation before making a decision on interest rates.
UK CPI inflation is expected to tick higher in May, forecasting at 0.4% versus the previous 0.3%. Annualized UK CPI inflation is still forecast to ease to 3.5% YoY versus the previous 3.9%. A US market holiday will leave a hole in Wednesday’s market flows, with US institutions darkened in observance of the Juneteenth holiday.
BoE is set to release a fresh rate call on Thursday, with markets expecting the UK’s central bank to keep rates on hold at 5.25%. On Friday, the trading week will wrap up with UK Retail Sales, UK PMIs, and US PMIs. UK Retail Sales are forecast to recover to 1.5% MoM in May, while the UK Manufacturing PMI is expected to print slightly lower at 51.0 versus the previous 51.2.
Technically, rough consolidation has marred near-term technical factors on GBP/USD, and the pair is trapped just beneath the 200-hour Exponential Moving Average (EMA) at 1.2727. Daily candlesticks are clattering against technical support at the 50-day EMA at 1.2673, keeping the pair bolstered above the 200-day EMA near 1.2597.
