Despite the gains yesterday, GBP/USD isn't really doing much as of late even though there has been some material dollar weakness in the major currencies space. The pair is down 0.3% today to 1.2335 as buyers fail to really do much with yesterday's softness in the greenback, following the Fed's latest policy decision and Powell press conference.
The BOE is coming up next and that the event itself is not likely to do the pound much favour either.
Looking at the GBP/USD chart above, the pair is consolidating after having ran into resistance from the December highs at 1.2443-46 and I would argue that is a testament to the pound's lack of bullishness.
Recent data from the UK has been poor and even with the dollar on the brink, it's not enough for buyers to get excited. The BOE today may just very well seal the deal, in the sense that the pound is not likely to see much upside as a whole in the short-to-medium-term.
The central bank is expected to hike by 50 bps later but it is set to be their last one, before stepping down to 25 bps increments. Markets are not optimistic about a high terminal rate and with consumer spending collapsing towards the end of last year, there is increasing belief that policymakers will dial back on any remaining hawkish sentiment as we approach the sunset of the tightening cycle.
If you want a clearer picture of the divergence in sentiment in the market at the moment, EUR/GBP best displays that with a push above 0.8900 to fresh highs since September last year. The pair is now eyeing a move towards the 0.9000 mark, all else being equal:
