GBP/USD: Mildly offered around 1.2550 as traders await Fed, BOE

• GBP/USD retreats towards the two-year low marked last week, fades the previous day’s rebound.
• BOE vs. Fed drama keeps the pair pressured, Brexit woes also keep sellers hopeful.
• US dollar stays firmer around 20-year high as yields back bulls ahead of the Fed’s 0.50% rate hike.
• BOE sounds less optimistic due to economic challenges, which in turn can supersede Fed’s normal action, if any, to favor bears.

GBP/USD fails to extend the previous day’s corrective pullback from a two-year low, down 0.15% intraday as sellers attack 1.2550 during early Monday morning in Europe.

The cable pair’s latest weakness could be linked to the US dollar’s strong start to the key week comprising the monetary policy meeting of the Fed, as well as April’s Nonfarm Payrolls (NFP). Also weighing on the quote are the chatters surrounding the Bank of England (BOE) policymakers’ inability to copy the Fed’s tune, due to economic hardships at home.

The US Dollar Index (DXY) reverses the previous day’s pullback from a 20-year high with 0.22% intraday gains around 103.45 as traders rush to the greenback in search of risk-safety during the key week. Also helping the USD are the firmer US Treasury yields and recent fears emanating from Russia and China.

It’s worth noting that the uncertainties surrounding Brexit, the UK’s inability to match NATO spending commitments and doubts over UK PM Boris Johnson’s “right to buy” policy also exert downside pressure on the GBP/USD prices.

Amid these plays, the US stock futures rise half a percent but the US 10-year Treasury yields regain upside momentum, around 2.93% at the latest.

Although week-start buying of the USD recently weighed on the GBP/USD prices, today’s US ISM Manufacturing PMI for April, expected at 58.0 versus 57.1 prior, will be important for intraday directions. However, major attention will be given to Wednesday’s Fed moves and Thursday‘s BOE action.

Also read: GBP/USD Weekly Forecast: In search of a bottom, with eyes on Fed and BOE

Technical analysis

Late 2020 bottom surrounding 1.2675 guards the quote’s immediate rebound. Until then, GBP/USD remains vulnerable to refreshing the multi-day low, currently around 1.2410.