GBP/USD holds below 1.2500 ahead of BoE rate decision

The GBP/USD pair remains on the defensive around 1.2495 on Thursday during the early Asian session. Greenback edges higher for the third consecutive day, which weighs on the major pair. Traders turn to cautious mode ahead of the Bank of England (BoE) interest rate decision later in the day, with no change in rate expected. Also, the US weekly Initial Jobless Claims are due on Thursday, followed by the Federal Reserve’s (Fed) Mary Daly speech. 
 
The Fed officials have offered some cues amid the absence of US top-tier economic data releases earlier this week. On Wednesday, Boston Fed President Susan Collins said it will take longer than previously thought to bring inflation down to the 2% target, emphasizing that the rate will likely stay higher for longer. New York Fed president John Williams and Minneapolis Fed president Neel Kashkari also showed that they favor holding rates at current levels for longer. These hawkish comments from the Fed policymakers provide some support for the US Dollar (USD) and create a tailwind for the GBP/USD pair. 

The FOMC committee decided to keep interest rates unchanged last week. The hotter-than-expected US inflation data has kept officials from lowering borrowing costs. Financial markets see under two cuts this year, from as many as six seen at the beginning of 2024.

On the other hand, the BoE is likely to keep the key rate of interest unchanged at 5.25% at its May meeting on Thursday. However, the downward trajectory of the UK’s inflation has triggered speculation that the BoE might cut its rate before the US Fed. Investors will take more cues from the BoE’s Bailey and Pill speeches on Thursday. In the event that the BoE policymakers continue their dovish stance, the Pound Sterling (BoE) might face further depreciation.