The pound firmed in the wake of the latest US Federal Reserve meeting, in which the central bank held interest rates steady as widely anticipated. The Fed, however, refrained from offering clear signals about any near-term pivot toward rate cuts, reiterating a cautious stance on the future direction of monetary policy. Even so, the dollar was unable to build fresh upward momentum, clearing the path for sterling to recoup a portion of its recent losses. The Fed's hold contrasts with growing market expectations that other major central banks are further along in their respective easing cycles, a divergence that has kept pressure on the dollar in recent sessions.

Market focus has now shifted almost entirely to the Bank of England's upcoming policy meeting, with its decision poised to be the dominant catalyst for the pound through the remainder of the week. While investors do not anticipate a change in the Bank Rate, attention will centre on the Monetary Policy Committee's vote split, the accompanying policy statement, and remarks from BoE Governor Andrew Bailey. The vote composition matters because it serves as a real-time gauge of how many policymakers are leaning toward cuts; a shift toward more dovish dissent would signal that easing is drawing closer. UK services inflation and wage growth have been persistent areas of concern for the MPC, meaning Bailey's characterisation of those indicators will be closely parsed. Any hints about the potential timeline for monetary easing could spark significant volatility in sterling.

The euro also faces a heavy slate of macroeconomic data today. Traders will be watching preliminary inflation and GDP readings from Germany, alongside GDP and inflation prints from Spain. These releases will help market participants gauge the resilience of the eurozone economy and recalibrate expectations for the European Central Bank's next policy moves. The ECB has already begun lowering its deposit rate, placing it ahead of both the Fed and the BoE in the current cycle, so fresh inflation data will feed directly into the debate over the pace and size of subsequent cuts. Stronger-than-expected figures could lend support to the single currency, whereas softer data may reinforce bets on further ECB easing.

GBP/USD

In the aftermath of the Fed meeting, GBP/USD advanced toward the 1.3400 region. A rebound off the 1.3270 support level, coupled with a sharp daily rally, enabled buyers to form a bullish engulfing candlestick pattern. Technical analysis suggests that additional upside toward 1.3440–1.3480 is possible if the 1.3270–1.3300 zone solidifies as support. Conversely, a decisive break below yesterday's low could trigger a renewed slide toward 1.3180–1.3220.

Key events for GBP/USD:

• Today at 14:00 (GMT+3): Bank of England interest rate decision
• Today at 14:30 (GMT+3): Speech by Bank of England Governor Andrew Bailey
• Today at 15:30 (GMT+3): US initial jobless claims

EUR/GBP

EUR/GBP is displaying early signs of recovery after forming a bullish harami pattern on the daily chart. Should the BoE decision disappoint market participants, the pair could extend its climb toward 0.8600–0.8620. This bullish scenario would be invalidated by a decisive break below the 0.8540–0.8560 support area.

Key events for EUR/GBP:

• Today at 08:30 (GMT+3): France GDP
• Today at 11:00 (GMT+3): Germany GDP
• Today at 15:00 (GMT+3): Germany Consumer Price Index (CPI)

Overall, the near-term trajectory of sterling will hinge primarily on the Bank of England's decision, the MPC vote split, and Governor Bailey's commentary on the interest-rate outlook. For the euro, inflation and GDP releases from the eurozone's largest economies remain critical, as they could shape expectations for the ECB's next policy steps. With the market impact of the Fed meeting now fading, European economic data and signals from the Bank of England are set to become the primary drivers for both GBP/USD and EUR/GBP through the end of the week.