GBP/USD attempts to retrace the intraday losses near 1.2380.

GBP/USD is facing downward pressure ahead of the interest rate decisions from both countries.

Fed is expected to maintain its current interest rates on Wednesday, but a quarter basis points hike is expected through the end of the year 2023.

Investors expect BoE to increase interest rates by a quarter basis points in the upcoming meeting on Thursday

GBP/USD struggles to halt the two-day losing streak, recovering from the intraday losses and trading around 1.2380 during the European session on Monday. The pair is facing downward pressure ahead of the interest rate decisions from the United States (US) and the United Kingdom (UK).The US Federal Reserve (Fed) is expected to maintain its current interest rates without changes in the upcoming meeting scheduled on Wednesday. Furthermore, market participants will carefully scrutinize the central bank’s communications, seeking any clues or insights regarding the possible future direction of interest rates. The market is still factoring in a 25 basis points rate-hike through the end of year 2023.

The US Dollar Index (DXY), assesses the performance of the US Dollar (USD) against six other major currencies, hovering around 105.30 at the time of writing. The improved US Treasury yields could contribute upward support for the Greenback. The yield on the US 10-year bond has declined to 4.34%, up by 0.35% by the press time.

The Greenback faced downward pressure, which could be attributed to the release of downbeat consumer sentiment data from the United States (US) on Friday. The preliminary Michigan Consumer Sentiment Index for September showed a reading of 67.7, down from the previous figure of 69.5 and below the expected reading of 69.1.

The GBP/USD traders anticipate that the Bank of England (BoE) will raise interest rates by 25 basis points in the upcoming meeting on Thursday. This potential rate hike by the BoE is driven by the central bank’s aim to tackle rising inflationary pressures and maintain economic stability in the United Kingdom (UK).

However, BoE Governor Andrew Bailey’s statement suggests that the central bank is nearing the end of its current interest rate-hike cycle. This, combined with concerns about the possibility of a recession and evidence of a slowing labor market in the UK, could put pressure on the BoE to consider pausing or adjusting its rate-hiking cycle in the future.

Investors will likely watch the notable events scheduled ahead of the monetary policy decisions for the United Kingdom (UK), the Consumer Price Index (CPI), Core CPI, and Producer Price Index (PPI) for August will be published on Wednesday.On the US docket, Building Permits will be eyed. Traders will closely monitor these data releases, seeking trading opportunities within the GBP/USD pair.