(MENAFN- Daily Forex)

• The British pound briefly rallied before stalling near key moving averages, reflecting hesitation ahead of upcoming central-bank decisions.
• With rate-cut expectations in both the US and UK, the broader bias remains downward unless GBP/USD can break above 1.3350.

The British pound initially rallied during the trading session on Monday, but as you can see, we have turned around to show signs of hesitation. What I find interesting is that we find ourselves testing a couple of major moving averages at the moment, and we don't seem to have the massive amount of momentum that would suggest that we are going to blow through these indicators. After all, the 50-day EMA and the 200-day EMA just below them both are important to traders, and it looks like they are in fact offering a little bit of a lid. The British pound has been falling since the middle of September, when we got the FOMC statement and press conference that got rid of the idea that the Federal Reserve is going to start cutting rates rapidly. Quite frankly, the inflation situation in the United States hasn't been completely beaten. So, we'll have to wait and see how long that takes to change the attitude of the FOMC.

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On the other side of the Atlantic Ocean, you have the United Kingdom, where, of course, the Bank of England almost cut rates at the last meeting but did not. And with that, the British pound did rally a bit, but the vote count was awfully close. And this does suggest that it is probably only a matter of time before we see rate cuts coming out of London. And therefore, if Washington, DC, cuts rates, and then London cuts rates, you essentially have no change. And I think that's what you're seeing here.

EURUSD Chart by TradingView

Ultimately, this is a market that I do favor the downside. But we need to see a little bit of a drop in order to start kicking up the momentum to drop to the 1.30 level in the short term. I think we're just hanging around. And it is worth noting that we are only nine days away from the FOMC interest rate decision. So, there is going to be a lot of questions If we can break above the 1.3350 level now, I would anticipate that the pound is probably going to be very strong and go looking to the 1.38 level. Until then, I'm fairly skeptical.

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