British Pound consolidates above 1.3500 vs USD ahead of this week's UK data, Fed, BoE

The GBP/USD pair struggles to capitalize on Friday's bounce from the vicinity of the monthly swing low and consolidates above the 1.3500 psychological mark at the start of a new week. Traders seem hesitant to place aggressive directional bets and opt to move to the sidelines ahead of the key central bank event risks.

The US Federal Reserve (Fed) and the Bank of England (BoE) are scheduled to announce their monetary policy decisions on Wednesday and Thursday, respectively. The US inflation figures, released last week, reaffirmed market bets that the US central bank could raise interest rates by 25 basis points (bps). This, along with a further escalation of tensions in the Middle East, is seen as acting as a tailwind for the safe-haven US Dollar (USD) and keeping a lid on the GBP/USD pair.

In the latest developments, Yemen’s Iran-backed Houthi fighters said that they used drones and missiles to attack a military base in southern Saudi Arabia. Moreover, an Iranian cargo vessel was struck early Sunday in the Strait of Hormuz, while a planned regional meeting between Gulf states and Iran regarding the Strait of Hormuz has been postponed. This keeps the geopolitical risk premium in play, which turns out to be another factor underpinning the safe-haven Greenback.

The British Pound (GBP), on the other hand, draws support from Friday's better-than-expected UK GDP report, showing that the economy expanded 0.4% in July, compared to consensus estimates for a flat reading. Traders now look to the UK jobs report on Tuesday and the UK CPI report on Wednesday for short-term impetus. However, expectations that the BoE will leave rates unchanged at 3.75% hold back GBP bulls from placing fresh bets and cap the upside for the GBP/USD pair.

GBP/USD 4-hour chart

Technical Analysis

The GBP/USD pair holds just under the 200-period Simple Moving Average (SMA) at 1.3522 and the 38.2% Fibonacci retracement at 1.3516. This keeps the near-term tone mildly bearish and suggests that upside attempts are currently capped unless buyers can decisively reclaim this cluster.

A sustained break above these would open the way toward the 23.6% Fibo. retracement at 1.3575 and, later, the cycle anchor near 1.3671. On the downside, initial support emerges at the 50.0% retracement at 1.3468, with deeper floors at the 61.8% level at 1.3420 and the 78.6% retracement at 1.3352, ahead of a more important base around 1.3265.