GBP/USD holds in corrective territory near 1.2630, eyes on UK growth and BoE for June

• GBP/USD is steady in the open as markets open in a quiet start to the week. 
• Eyes will be on the BoE this month and UK GDP.

GBP/USD is trading around flat for the start of the week as traders look ahead for what could be a busy month for the pair after the announcement of a £15bn support package for households across the UK, along with the central bank meetings and important economic data. 

The Bank of England is expected to raise rates further at its June 16 meeting to combat the risk of self-perpetuating price rises.''Reconciling growth and inflation risks is a tough task for the BoE,'' analysts at Rabobank explained. 

''That said, the Bank can be expected to want to urgently repair its inflation-fighting credibility.  This is especially true in the wake of the criticism from Westminster which has triggered a defensive statement from BoE Governor Bailey, '' the analysts explained.

''He rejected the argument that the MPC “let demand get out of hand and stoked inflation” and made clear that the bank has not only raised rates four times so far in this cycle but is prepared to do so again based on the assessment at each of its meetings. Last week the MPC’s Pill made clear that the current challenges are an important reminder of the importance of price stability as an anchor for wider economic stability.  This is evidence that his focus is firmly on inflation risks rather than growth.''

The current inflation focus of the BoE has been a focus of support for the pound. However, the economy will fall under the microscope this month as investors will look to the April Gross Domestic Product in the coming days, mid-June. Additionally, the pound is regarded as a risky currency and it is high beta to equities. 

''Slowing growth in China and energy security risks in Europe could bolster safe-haven demand for the USD,'' analysts at Rabobank argued in this regard.

''In an environment in which the Fed and other central banks are removing liquidity, we expect higher levels of volatility in the FX market.  We see risk that GBP/USD could again re-visit it recent lows in the coming months.''

The US dollar was mixed against its major trading partners around the final data of the week that included personal income and spending reports, the PCE price measures favoured by the Federal Reserve and the final reading of the May Michigan Sentiment index.

Reuters reported that ''Personal consumption expenditures rose by 0.9% in April after a 1.4% surge in March, lifted by gains in both goods and services spending. Core PCE prices rose by 0.3% for a third straight month, as expected, slowing the year-over-year rate to a still-brisk 4.9% from 5.2% in the previous month. Personal income was up 0.4% in April after larger gains in the previous two months, with transfer payments flat and wage and salary growth slower than in February and March.''

As for the Federal Reserve, comments from FOMC officials this week turned slightly dovish in terms of how fast rates should be lifted later in the year after an initial surge. In turn, the US dollar has been on the backfoot, despite expectations of an increase of 50 basis points for the June 14-15 meeting.