GBP/USD remains in a range below 1.2400, awaiting the FOMC and BoE this week

• GBP/USD is struggling to gain significant traction and trading in a tight range on Monday.
• Traders seem reluctant to open new positions ahead of this week’s central bank event risk.
• Expectations for lower Fed rate hikes continue to weaken the USD and offer some support for the pair.

The pair GBP/USD starts the week on a dovish tone and oscillates between tepid gains and minor losses during the early stages of the European session. The pair remains within a multi-day range and is currently sitting just below the round 1.2400 level.

Traders appear to have stayed on the sidelines awaiting this week’s central bank events, which in turn does not provide any significant boost to the GBP/USD pair. It is planned that the Federal Reserve announce its decision at the end of a two-day monetary policy meeting on Wednesday. Then on Thursday, the bank of england will release its latest monetary policy update, which will help determine the pair’s next directional move.

Meanwhile, the speculation that high consumer inflation will force the Bank of England (BoE) to continue raising rates offer some support to the pound sterling. This, coupled with the underlying bearish sentiment surrounding the US dollar, acts as a tailwind for GBP/USD. In fact, the DXY dollar index, which measures the dollar’s strength against a basket of currencies, is weakening near nine-month lows amid expectations of lower rate hikes from the Fed.

Investors now seem Convinced that the US central bank will soften its hawkish stance on signs of easing inflationary pressures. These expectations were bolstered by the release on Friday of the Fed’s preferred inflation gauge, the US core PCE price index, which fell to a year-over-year rate of 4.4% in December, from 4.7% previously. However, other recently released macroeconomic data supported the idea of ​​the Fed keeping its hawkish stance for longer.

Therefore, investors will be looking for clues on future Fed rate hikes, which will play a key role in USD price dynamics and provide further directional momentum to GBP/USD. The pair now looks more likely to prolong the consolidation move in the absence of any relevant economic releases from either the UK or the US on Monday.

GBP/USD technical levels