GBPUSD slowed downward movement amid expectations of central bank decisions

19 March 2024 81
GBPUSD slowed downward movement amid expectations of central bank decisions

On Tuesday, the GBPUSD currency pair is experiencing a correction ahead of a series of central banks meetings this week. Market participants are waiting with particular attention for the US Federal Reserve's (Fed) decision on possible monetary policy easing, which will be announced on Wednesday.


Traders quoted by LSEG suggest that the Fed will cut interest rates less than three times this year by 25 basis points. 


According to CME's FedWatch tool, the probability of a Fed rate cut in June is about 51%, lower than previous expectations.


Meanwhile, investors' attention is focused on whether Fed officials will change their projections for rate cuts over the next three years. Last December, the financial regulator envisioned easing monetary policy by 75 basis points in 2024.


Meanwhile, market participants speculate that the Bank of England will leave the interest rate at 5.25% this Thursday. They are waiting for a bigger picture to be revealed by additional data, particularly on wages and the services sector, to assess the long-term validity of the observed decline in inflation.


UK consumer prices fell from 11.1% in October 2022 to 4% in January this year. Moreover, the upcoming report for February, which will be published on the eve of the Bank of England meeting, may show a further decline in inflation to 3.6%.


GBPUSD quotes have broken out of the H4 timeframe uptrend.


In terms of wave analysis, the price is currently forming the third descending wave on the H1 timeframe. The breakdown of the top of the first wave at 1.2745 has already taken place. This indicates a potential strengthening of the downward momentum. Bears Power indicator volumes (standard values) are in the negative zone, indicating a sell-side movement.



Short-term prospects for GBPUSD suggest selling

The target is at the level of 1.2580.

Part of the profit should be taken near the level of 1.2670.

A stop-loss could be placed at the level of 1.2815.

The bearish trend is short-term, so trade volume should not exceed 2% of your balance.

This content is for informational purposes only and is not intended to be investing advice.

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