GBP/USD remains on the defensive near 1.2726 amid the stronger USD and risk-off mood. Fed is likely to maintain its monetary policy for a fifth straight time at its March meeting. BoE is expected to leave rates unchanged at 5.25% on Thursday, with the expectation of cutting rates in August. The Fed and Bank of England interest rate decisions will be the highlights of this week. The uptick in the US Dollar above 103.50 and higher US yields provide some support to the major pair.
On the other hand, UK inflation is moderating, but the BoE remains cautious in its approach until the CPI returns to the 2% target. The BoE is likely to leave interest rates unchanged at 5.25% on Thursday. Investors expect the UK central bank to start cutting rates in August, with one or two further cuts by the end of the year. Later on Tuesday, the US Building Permits, and Housing Starts are due in the US docket.
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