The rich economic calendar and the approximation of the date X, July 23, when a vote takes place within the Conservative Party about a new leader, allows the British pound to claim the role of the most interesting currency of the third week of July. Only signals given by Jerome Powell about easing the Fed's monetary policy allowed the GBP/USD "bulls" to return the pair's quotes above the base of the 25th figure, but in the struggle of two weak opponents, the policy can tilt the scales.

It cannot be said that American statistics are regularly disappointing: June employment has exceeded the wildest forecasts of Reuters experts and core inflation mark of 2%. Nevertheless, the Fed is ready to ease monetary policy in order to prevent a recession. The derivatives market expects that the federal funds rate will be lowered at two FOMC meetings by the end of the year (in July and September). His testimony corresponds to the opinion of Chicago Federal Reserve Bank President Charles Evans, who believes that borrowing costs should be reduced by 50 bp before the end of the year, and the position of 53 experts from the Wall Street Journal. Their consensus at the end of 2019 is 1.99%.

By contrast, British statistics are disappointing with an enviable frequency, forcing the index of economic surprises to drop to its lowest level in the last 8 years. Following the sad news from PMI is a disappointing GDP. Bloomberg experts expect a further slowdown in retail sales (July 18 release), inflation reluctance to accelerate (July 17) and a slowdown in employment growth (July 16). As a result, BoE official Gertjan Vlieghe begins to talk about reducing the repo rate to zero and says that the chances of a weakening of monetary policy are higher than the likelihood of its tightening.

UK GDP Dynamics

Thus, both the Fed and the Bank of England intend to cut rates by 50 basis points. At the same time, the fact of excessively bloated speculative long positions, which will most likely be closed, plays against the US dollar; versus pound is a factor in changing the BoE worldview. More recently, Mark Carney talked about monetary restriction is now a "dovish" rule that puts the ball inside the MPC.

Dynamics of central bank rates

If during exchange rate formation on Forex monetary policy was used exclusively, then the positions of the opponents could be called balanced and talk about the consolidation of GBP/USD pair. Alas, the uncertainty about who will eventually take the chair of the British Prime Minister makes the position of sterling more vulnerable than the US dollar. The chances of Boris Johnson, who is ready to "bring Misty Albion out of the EU or die," are three times higher than Jeremy Hunt. At the same time, the volatility of the pound remains low. Despite the loud statements of the favorite, the market is still not sure about Brexit uncertainty. If it does happen, the GBP/USD pair runs the risk of sagging in the direction of 1.20–1.22.

Technically, the bears rule the ball until the pair is listed below 1.278. A return to important resistance and his successful assault will activate the Expanding Wedge pattern and will indicate a break in the downtrend.

GBP / USD daily graph