The GBP/USD pair remains within a sideways trend, with future developments sparking interest.

The British pound sterling is currently trading in a lateral range against the US dollar, with the current GBP/USD rate at 1.2698.

While the pound maintains stability against the USD, it has achieved a four-month peak against the EUR. This is attributed to the perceived stability of the British economy, and the Bank of England's stance suggests a delayed decision on rate cuts compared to its counterparts.

Recent statistics published yesterday revealed that the UK budget deficit in December fell below expectations. In theory, this may pave the way for tax rate reductions in the upcoming budget set to take effect in March.

The pivotal question for GBP revolves around how far behind the Bank of England will trail the Federal Reserve and the ECB in terms of monetary policy easing.

Market expectations currently indicate a 50% likelihood of a BoE interest rate cut in May. However, this timing might be deemed premature by the regulator, given its ongoing concern about elevated inflation levels in the country.

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