British Pound waffles in a range

For those looking for a range-bound market to trade, the British pound just might fit the bill.

For months now, the pound sterling has been bouncing back and forth within a fairly well defined trading range between roughly 1.71 on the downside and 1.7625 on the upside. Regarding expectations for a breakout anytime soon, most market watchers said the equivalent of “don’t hold your breath.”

One of the key factors holding the sterling in a consolidation is the Bank of England’s (BOE) monetary policy outlook. With the overnight rate currently standing at 4.50 percent, the next move expected by the BOE later this year is a rate cut. But, for now, the Bank is seen as “on hold.”

“Because the BOE is on hold, there has been no real structural demand for sterling lately,” says Jamie Coleman, managing analyst at IFR-Forex Watch.

The steady monetary policy outlook from the BOE contrasts sharply with other major central banks around the world, which are still perceived to be in a tightening mode. That includes the U.S. Fed, the ECB, and even the Bank of Japan.