During Wednesday’s Asian session, the GBP/USD pair fluctuated around 1.2710. The Pound Sterling (GBP) recently found support against the US Dollar (USD) after breaking its four-day winning streak due to a shift in market sentiment.

The Fed members’ hints of potential rate cuts by 2024’s end initially weakened the US Dollar, but a move towards risk aversion later applied pressure to the GBP/USD.

The US Dollar Index (DXY) is currently consolidating near 102.50, influenced by rising US Treasury yields, with the 2-year and 10-year bonds yielding 4.36% and 4.02%, respectively. Despite this, the Fed’s dovish outlook has applied downward pressure on the Dollar.

Atlanta Fed President Raphael W. Bostic noted a sharper-than-expected inflation decline, suggesting possible rate cuts. Similarly, US Fed Governor Michelle W. Bowman indicated that rate reductions could be considered if inflation aligns closer to the 2% target.

Contrastingly, the Bank of England (BoE) signals further rate hikes, differing from the Fed’s potentially easing stance. Former BoE official DeAnne Julius predicts the BoE won’t reduce rates in 2024, citing potential inflation shocks from escalating Middle East tensions.

Market focus now shifts to BoE Governor Andrew Bailey’s upcoming speech and the UK’s Manufacturing Production data, with US CPI figures due on Thursday.

GBP/USD Technical Outlook

Technically, GBP/USD has struggled to sustain above 1.2720, hinting at an intraday bearish trend with potential targets near 1.2590.

A breach above 1.2720 and 1.2740 could halt this decline, reinstating the primary bullish trend. The expected trading range is between 1.2610 support and 1.2770 resistance, with a bearish trend anticipated for the day.

GBP/USD Live Chart