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.

Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

Source: fxstreet