GBP/USD eases from three-week top to sub-1.2600 zone on diverse catalysts, US GDP eyed

GBP/USD bulls take a breather around a three-week top as buyers struggle for clear direction s amid mixed catalysts and a sluggish session during early Thursday in Europe. That said, the cable pair refreshed multi-day high with 1.2612 level before easing to 1.2575, taking rounds to 1.2585 by the press time.

Talking about the recent positives, headlines from the recent Federal Open Market Committee (FOMC) Minutes join the firmer odds of the Bank of England’s (BOE) faster rate hikes to keep the GBP/USD prices strong. As per the latest Fed minutes, the policymakers endorsed the idea of 50 basis points (bps) rate hikes for only the next couple of meetings, also raising doubts on the rate-lift trajectory past September, to favor sentiment. The Minutes rather highlighted inflation concerns and mentioned, “It would be appropriate to consider sales of mortgage-backed securities.”

It’s worth noting that such statements renewed concerns of limited monetary policy tightening and helped Wall Street to post the biggest daily gains in a week.

On the other hand, Bank of England (BOE) Chief Economist Huw Pill said, in an interview with the Western Mail newspaper, that he believes that more interest rate hikes are needed, adding that he is aware that could trigger an economic recession.

Alternatively, fears emanating from the Ukraine-Russia crisis and China’s covid conditions, as well as the fresh fears of the Sino-American tussles, weigh on the market sentiment and favor the US dollar’s safe-haven demand. Furthermore, Brexit jitters over the Northern Ireland Protocol (NIP) are an extra burden on the GBP/USD prices.

Against this backdrop, the S&P 500 Futures print mild losses around 3,970 whereas the US 10-year Treasury yields again bounce off monthly low, after Wednesday’s failed attempt, up 2.5 basis points (bps) to 2.77% at the latest.

That said, GBP/USD prices may remain mildly bid amid an off in major European bourses and a light calendar. Though, the second readings of the US Q1 2022 GDP, the annualized figure is expected to remain unchanged at -1.4%, will join the US Personal Consumption Expenditure (PCE) details for April and weekly jobless claims to direct short-term cable moves.

Technical analysis

GBP/USD remains directed towards the monthly high near 1.2640 unless breaking a two-week-old support line near 1.2530.