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British Pound Gains Momentum Ahead of Federal Reserve Decision

In the wake of the upcoming Federal Reserve monetary policy decision, the British Pound (GBP) has surged positively against the US Dollar and Euro. The GBP/USD pair has shown resilience, bouncing off the recent swing low of 1.2798, and is currently striving to break above the 1.2900 mark.

Traders are cautiously observing the Federal Reserve Chair, Jerome Powell’s post-meeting press conference, anticipating clues about the future trajectory of interest rates. Market sentiment hints at a 25 basis point rate hike today, taking the interest rate range to 5.25%-5.50%, followed by a consolidation period lasting several months. The US economy’s favorable performance with declining inflation, robust growth, and a thriving job market has further buoyed optimism.

With all eyes on the Federal Reserve’s actions, the GBP/USD pair’s next move remains uncertain. Traders are closely monitoring Powell’s statements, expecting a potential shift towards a more neutral stance, while emphasizing data dependency within the Federal Open Market Committee (FOMC). Key support levels for the GBP/USD pair lie at 1.2800, followed by 1.2742 and 1.2667, while a dovish tone from Chair Powell could bring 1.3000 into focus.

Meanwhile, the EUR/GBP pair is attempting to halt its recent decline, but several challenges lie ahead. Lingering weakness in the Euro Area and concerns about German growth add pressure to the European Central Bank (ECB) ahead of its upcoming policy decision. ECB President Christine Lagarde faces the difficult task of balancing inflation control without hampering growth prospects. The EUR/GBP pair’s support levels are observed at 0.8549 and 0.8519.

Retail trader data reveals mixed sentiments in both pairs. For GBP/USD, 49.09% of traders are net-long, while 70.87% of traders are net-long for EUR/GBP. These figures reflect the cautious market sentiment prevailing as traders brace for crucial policy decisions that could have significant implications on the currency markets.