GBP/USD recovers lost ground above the 1.2850 mark ahead of FOMC.

GBP/USD recovers early lost ground to the 1.2860 area during the Asian session on Monday.The GBP/USD pair attracts some follow-through buying and bounces off the 1.2815 mark on Monday. The major pair currently trades around 1.2860 in the early Asian session. Market players prefer to wait to be sidelined ahead of the key Federal Open Market Committee (FOMC) meeting on Wednesday.

The Office for National Statistics (ONS) reported on Friday that the UK monthly Retail Sales data rose 0.7% in June vs. 0.1% in May and above the 0.2% expected. Meanwhile, annual Retail Sales data contracted by 1.0% against expectations of -1.5% and -2.1% prior. Additionally, the monthly headline Consumer Price Index expanded 0.1% versus the consensus of 0.4% and 0.9% prior.

Investors were divided on the rate at which the Bank of England (BoE) will raise interest rates on August 3. Market participants expected BoE Governor Andrew Bailey to raise interest rates by 50 basis points (bps), but due to the softer inflation data, a group of investors is leaning towards a 25 bps rate hike.

On the US Dollar front, the Unemployment Claims fell below expectations and marked the lowest reading since mid-May. This data raised market anticipation about the possibility of future Fed tightening policy despite mixed findings from the US Retail Sales figure. The market priced in a 25 basis point rate (bps) hike on Wednesday. However, investors are repricing another Fed rate increase after the July meeting, causing the Greenback to rebound. The anticipation for the Fed to raise rates after the July meeting increased to 28% from 15.9% last month, according to the CME FedWatch Tool.

Later in the day, the UK Flash Manufacturing and Service PMI will be due. Market participants will shift their focus to the FOMC meeting on Wednesday. The hawkish stance from the Fed could weigh on GBP/USD ahead of the BoE meeting scheduled for August 3.

AUD/USD stays defensive below 0.6750 after mixed Australia PMIs

AUD/USD is off the lows but remains on the back foot below 0.6750 at the start of the blockbuster week on Monday. The Aussie digests mixed Australian S&P Global Preliminary PMI reports while traders remain cautious ahead of this week’s Fed decision. US PMIs coming up next.

AUD/USD News

USD/JPY drops below 141.50 amid cautious mood, Kanda’s comments

USD/JPY has come under renewed selling pressure, trading below 141.50 in the mid-Asian trading on Monday. The Japanese Yen benefits from a cautious mood and the country’s top FX diplomat Kanda’s comments, despite mixed PMI data. US PMIs awaited.

USD/JPY News

Gold appears ‘buy-the-dips’ trade kicking off a big week

Gold price is nursing losses while defending $1,950 early Monday, pausing last week’s three-day downtrend. The United States Dollar (USD) has entered a phase of upside consolidation amid a cautious market mood and steady US Treasury bond yields, as investors stay on tenterhooks bracing for a big central banks’ week.