GBP/USD is facing fresh selling pressure on Wednesday due to a mix of factors. The British Pound (GBP) continues to struggle, particularly afterdovish comments from Bank of England (BoE) Governor Andrew Bailey last week, which have raised expectations for a quicker rate-cutting cycle. This sentiment is contributing to the pair’s decline. Currently, GBP/USD is trading around the 1.3085-1.3080 range, remaining close to a nearly four-week low reached on Monday.
Market participants are increasingly convinced that the BoE may soon accelerate its rate cuts, especially following Bailey’s remarks about potentially becoming more aggressive if inflation data improves. This outlook is putting downward pressure on the GBP. In contrast, the US Dollar (USD) is holding strong near a seven-week high, buoyed by reduced expectations for significant policy easing from the Federal Reserve (Fed). Currently, the market is anticipating an over 85% chance that the Fed will implement a 25-basis-point cut in November.
Additionally, rising geopolitical tensions in the Middle East and disappointment regarding China’s lack of new stimulus measures are lending support to the dollar, further influencing the GBP/USD pair’s downward trajectory.
Given this fundamental landscape, it seems the most likely direction for spot prices is downwards. However, bearish traders may hold off on making significant moves as they await the release of the FOMC meeting minutes later in the U.S. session. The upcoming US Consumer Price Index (CPI) and Producer Price Index (PPI) reports on Thursday and Friday will also play a crucial role in shaping USD dynamics and determining the next direction for the GBP/USD pair.
