The GBP/USD currency pair showed no meaningful movements on Monday. In this article, we focus on upcoming events that could (theoretically) influence the pair's direction. "Theoretically," because for the past three weeks, the market has been actively ignoring many factors that typically work against the U.S. dollar. Simply put, if the dollar had been falling these last three weeks, we would consider it entirely justified. However, the British pound, like the euro, remains stuck in a flat range on the daily timeframe. From its current levels, GBP/USD could still fall another 250 pips and stay within the bounds of this flat market. And once the flat range is over, a new trend will eventually follow. While the dollar could technically gain several hundred points in the medium term based on technical factors alone, it's unclear what fundamental reason might support it starting a full-scale uptrend. Two significant events this week will be the consumer inflation reports from both the United Kingdom and the United States. In both cases, an acceleration in prices is expected. However, the implications for the Bank of England and the Federal Reserve will differ. For the BoE, the pace of inflation is less critical. Inflation has been running above target for over a year now—almost double the official target—so it's becoming increasingly clear that the BoE is unlikely to lower interest rates any time soon. For the Fed, inflation is also not a key factor—at least not in the short term. The Fed is widely expected to cut rates twice more before the end of the year, as failure to do so could result in severe labor market strain. However, entering 2026, inflation will regain importance. Fed Chair Jerome Powell and most members of the FOMC have reiterated their commitment to both mandates—employment and price stability—stating clearly that persistently high inflation would make further policy easing unlikely. For now, the labor market takes priority, but once it stabilizes, inflation concerns will come to the forefront again.
Analysis are provided by InstaForex.
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