GBP/USD tests higher ground ahead of back-to-back central bank rate calls

• GBP/USD pushed back into the 1.3000 handle on Tuesday.
• Markets are buckling up for a one-two punch of Fed and BoE rate calls.
• The Fed is expected to hold steady on rates until April, BoE also seen steady.

GBP/USD traded thinly on Tuesday, but still inched back into the 1.3000 handle, chalking in a fresh 19-week high ahead of high-impact rate calls from both the Federal Reserve (Fed) and the Bank of England (BoE). The Fed is widely expected to hold steady on rates this week, but a fresh update to the Federal Open Market Committee's (FOMC) interest rate expectations will draw plenty of eyes.

The Federal Reserve's (Fed) latest rate call is due on Wednesday. According to the CME's FedWatch Tool, rate markets broadly anticipate the Fed to stand pat on rates for the next two meetings, with the next quarter-point rate trim expected at the Federal Open Market Committee's (FOMC) June meeting. However, the FOMC's latest interest rate forecasts will be released this week. They could send rate cut expectations through the wringer if Fed policymaker's expectations for interest rates deviate wildly from current market forecasts.

The BoE's upcoming rate call on Thursday will draw some Cable traders' attention, but not nearly as much as the Fed's showing during the midweek market session. After the BoE's latest rate cut last month, the UK's central bank is expected to vote 7-to-2 to keep rates unchanged at 4.5%, with two particularly dovish policymakers expected to vote for another quarter-point cut.

GBP/USD price forecast

GBP/USD is testing into its third straight week of gains, clipping back into the 1.3000 handle for the first time since last November. The pair is now trading 7.5% above January's multi-month low of 1.2100. Near-term price action is still tilted firmly in favor of Cable bulls, however GBP/USD may have overextended itself as technical oscillators remain pinned deep in overbought territory.

GBP/USD daily chart