GBP/USD closed the second straight day in positive territory on Tuesday despite losing its bullish momentum near 1.31. The pair is moving sideways near the mid-1.30s ahead of the all-important Fed rate decision. In absence of a major upside surprise, the cable should remain above 1.30, economists at ING report.

Trailing in the recovery

“The pound should continue to find some modest support from the tentative optimism around military de-escalation in Ukraine. Interestingly, GBP is struggling to recoup the war-related losses, unlike other European currencies.” 

“At Thursday’s Bank of England meeting, a rate hike combined with more hawkish language could allow the pound to play catch-up with the benign market environment and trigger some EUR/GBP weakness.”

“Barring a major upside surprise in the FOMC Dot Plots today, cable should hold above 1.3000 for another session.”

See – Fed Preview: Forecasts from 14 major banks, raising rates but with a huge asterisk related to the war