The British pound continues to weaken against major peers following a brief recovery earlier this week. After notable losses at the end of last week, sterling attempted a corrective rebound at the start of the current week, but pressure resumed following the Federal Reserve’s meeting.

While the decision to keep interest rates unchanged was widely expected, comments from Chair Jerome Powell were interpreted as moderately hawkish. The central bank signalled that it is in no rush to begin easing policy, as inflation risks remain elevated. Against this backdrop, US Treasury yields moved higher, supporting the dollar and weighing on most currencies, including the pound.

An additional source of caution is the upcoming Bank of England meeting. Investors are closely monitoring the vote split within the Monetary Policy Committee, the accompanying statement, and policymakers’ remarks, as any signals pointing towards potential policy easing could put further pressure on sterling.

GBP/USD

The upward correction in GBP/USD seen earlier this week stalled near the key resistance level of 1.3370. Technical analysis suggests a potential retest of the recent low around 1.3210, as a bearish engulfing pattern has formed on the daily timeframe.

Should today’s decision by the Bank of England provide support to sterling buyers, another attempt to test the 1.3370 level cannot be ruled out.

Key events for GBP/USD:

• today at 09:00 (GMT+2): UK claimant count change;
• today at 09:00 (GMT+2): Bank of England Monetary Policy Committee minutes;
• today at 14:30 (GMT+2): Philadelphia Fed Manufacturing Index (US).

GBP/JPY

The GBP/JPY pair rose to 212.70 yesterday but sharply reversed following the Federal Reserve meeting, closing the session below 212.00. A “dark cloud cover” candlestick pattern has formed on the daily chart, signalling the potential for a move lower towards last week’s lows in the 210.40–210.80 range.

Key events for GBP/JPY:

• today at 14:00 (GMT+2): Bank of England interest rate decision;
• today at 14:00 (GMT+2): Bank of England Monetary Policy Committee minutes;
• tomorrow at 09:00 (GMT+2): UK public sector net cash requirement.

Trade over 50 forex markets 24 hours a day with FXOpen. Take advantage of low commissions, deep liquidity, and spreads from 0.0 pips (additional fees may apply). Open your FXOpen account now or learn more about trading forex with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.