GBP/USD Fed and BoE, price heading towards 1.23

The GBP/USD exchange rate is slightly higher above 1.2100 at the beginning of the Monday European session, but traders remain cautious due to ongoing tensions in the Middle East and the upcoming meetings of major central banks. During the Asian session, the exchange rate remains within a narrow range around the 1.2100 level. Traders are awaiting significant central bank events scheduled for this week, such as the Federal Reserve (Fed) decision on Wednesday and the Bank of England (BoE) meeting on Thursday.

The Fed is expected to confirm the maintenance of interest rates for the second time in November, although there are still speculations about a possible rate hike later in the year. These speculations are supported by positive macroeconomic data from the United States, indicating a resilient economy. On the other hand, the BoE is expected to keep rates unchanged due to concerns about a possible recession, but it may leave the door open for further monetary tightening to combat inflation. This uncertainty is holding back traders from taking directional positions on the British Pound (GBP), and the lack of buying interest suggests that the most likely trend for the exchange rate is downward. However, bears should wait for acceptance below the 1.2100 level before entering new positions.

There are no significant economic data scheduled for Monday from either the UK or the US. Therefore, US Treasury bond yields will continue to influence the dynamics of the US Dollar (USD) and provide short-term trading opportunities for the GBP/USD exchange rate. Additionally, broader market sentiment will affect the demand for the US Dollar as a safe haven. Given the complex market variables, caution is advisable before entering new directional trades.

Additionally, the price is slightly outside a demand zone and is consistently forming higher highs and higher lows. A bullish trend is starting to take shape, and I personally expect a bounce on the trendline before considering a potential long entry with a target of 1.225. Let me know what you think. Happy trading to all, greetings from Nicola, the CEO of Forex48 Trading Academy.