GBP/USD holds ground above the 1.2600 mark on softer US Dollar

GBP/USD gains traction for the second consecutive day around 1.2608 on Wednesday.
The expectation of interest rate cuts from the Federal Reserve (Fed) has waned due to the stronger-than-expected US economic data.
The potential technical recession in the UK economy might lead Bank of England (BoE) officials to shift to a dovish interest rate stance.

Lallalit Srijandorn FXStreet

The GBP/USD pair trades on a stronger note amid the US Dollar's (USD) weakness during the early Asian trading hours on Wednesday. The rebound of the major pair is supported by the softer Greenback and lower US Treasury bond yields. At press time, GBP/USD is trading at 1.2608, adding 0.06% on the day.

The expectation of interest rate cuts from the Federal Reserve (Fed) has waned as US economic data came in better than expected. Additionally, Fed Chair Jerome Powell said on Sunday that it would not be appropriate to cut rates until there was greater confidence that inflation is moving to 2%. The markets are now pricing in a 15% possibility of rate cuts in March and priced in 50% odds of rate cuts in the May meeting. This, in turn, lifts the US Dollar (USD) and acts as a headwind for GBP/USD.

On the Pound Sterling (GBP) front, the GBP is at risk of a technical recession, which might lead Bank of England officials to shift to a dovish interest rate stance. The Bank of England (BoE) Chief Economist Huw Pill said on Monday that the question now for most of the central bank's policymakers was when it would be appropriate to start to cut interest rates, not if. Meanwhile, Governor Andrew Bailey said that inflation was moving in the right direction and that the BoE would keep borrowing costs under review.

On Wednesday, the UK Halifax House Prices for January and the US Goods Trade Balance for December will be due. Market players will keep an eye on the Fedspeaks this week for fresh impetus. These events could give a clear direction to the pair.

GBP/USD

Overview
Today last price	1.2611
Today Daily Change	0.0010
Today Daily Change %	0.08
Today daily open	1.2601

Trends
Daily SMA20	1.269
Daily SMA50	1.2678
Daily SMA100	1.2477
Daily SMA200	1.2564

Levels
Previous Daily High	1.2603
Previous Daily Low	1.2531
Previous Weekly High	1.2773
Previous Weekly Low	1.2614
Previous Monthly High	1.2786
Previous Monthly Low	1.2597
Daily Fibonacci 38.2%	1.2576
Daily Fibonacci 61.8%	1.2559
Daily Pivot Point S1	1.2554
Daily Pivot Point S2	1.2506
Daily Pivot Point S3	1.2481
Daily Pivot Point R1	1.2626
Daily Pivot Point R2	1.2651
Daily Pivot Point R3	1.2698

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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