Gbpusd Consolidates On Cautious Market

 Gbpusd Consolidates On Cautious Market

Gbp/Usd Consolidates Near 1.2730 On Cautious Mood

The market's mood has turned cautious ahead of the Federal Reserve's meeting, and it is also showing its effects on the GBP/USD.

The pair can be seen consolidating near the 1.2730 handle as the trades are trying to avoid taking any positions ahead of the high volatility. For the most part, no change is expected at the meeting but any comments regarding a policy shift or timing of rate cuts could provide a catalyst to the GBPUSD.

56.3% Odds Of Rate Cut In June

If we look back, the bond yields surged on Friday, which lifted the DXY as well. At that time, the market was driven by the anticipation that the Federal Reserve would remain hawkish for the foreseeable future. However, the bond yields appear to be retreating as the new trading week session has started.

look at the CME tool shows that there is only a 1% chance of a March rate cut by the Federal Reserve. In other words, the market can forget about the rate cuts happening in March. However, there is a 56.3% chance in June and around 75% change in July that the Fed will cut rates.

Datawise, the US Michigan Consumer Sentiment Index dropped to 76.5 in March while the Industrial Production (MoM went up by 0.1%. As for the UK's side, Consumer Inflation Expectations jumped by 3% against the previous reading of 3.3%.

As a result, there's now a greater chance that the BoE will move towards cutting rates in June 2024. As a result, it is only expected that the GBP will likely weaken and send the GBP/USD downward.

Today, the Rightmove House Price Index (MoM) was released for the month of March. This index showed a jump of +1.5% against an earlier reading of 0.9%. Next up is the Producer Price Index, Consumer Price Index, and the Retail Price Index from the UK's side.

All of these economic indicators are of little importance as the key event is most definitely the Federal Reserve's meeting due in the next few days.

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