Pound Sterling Latest: GBP/USD Attempts Comeback Post-FOMC Sell-off

GBP/USD attempted to come back after the FOMC sell-off; BoE’s Mann expressed concern over the overly optimistic rate cut estimates.

Bank of England’s Mann is concerned about optimistic rate cut estimates.

Catherine Mann is one of the staunch hawks within the Bank of England’s Monetary Policy Committee (MPC). Recently, she clarified why she no longer favored a hike. Mann believes that market expectations around rate cuts are too high, which also appears to support the local currency.

She has expressed that wage dynamics in the UK are more robust than in the EU and US, which makes it hard to argue that the BoE would be ahead of both nations regarding interest rate cuts. Something the market would have been attentive to was the February inflation report, which revealed an encouraging drop on the way to the Fed’s 2% target by mid-year.

Pound Sterling Latest: GBP/USD Attempts Comeback Post-FOMC Sell-off

POST FOMC REBOUND ON THE CARDS FOR GBP/USD?

The GBP/USD reveals an attempt to lift off the stern zone of support found at the 200-day simple moving average and the 1.2585 level that held up prices for large parts of early 2024 when prices exhibited a range-bound preference.

Since spiking above the prior range, not for the first time either, GBP/USD heads back into familiar territory as the pair looks to recover from the sharp decline. 1.2736 is the next level of resistance should bulls take over from here. Sterling benefits from a slightly weaker dollar at the start of the holiday-shortened week, which also happens to be very quiet from a scheduled risk point of view, with just PCE data scheduled for release on Good Friday.

Mixed IG Retail Client Sentiment

Retail trader data indicates that 59.14% of traders are currently net-long GBP/USD, with a long-to-short ratio of 1.45 to 1.

Contrary to crowd sentiment, this suggests a potential continuation of GBP/USD price declines.

Recent changes show a decrease in net-long positioning compared to yesterday but an increase compared to last week. This combination of current sentiment and recent shifts implies a continued mixed trading bias for GBP/USD.

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