The Pound Sterling (GBP) weakened against the US Dollar (USD) on Wednesday, trading below the key level of 1.2500.
- Light UK Data, Heavy US Focus: The GBP is largely influenced by the upcoming Fed decision, with a light economic calendar in the UK.
- BoE Rate Cuts Priced In: Markets expect the Bank of England (BoE) to cut interest rates in the coming months, putting downward pressure on the Pound.
Fed Decision in Spotlight
- The Federal Reserve’s policy decision later today is the main driver of market sentiment.
- The Fed is widely expected to maintain interest rates and maintain a hawkish tone due to persistent inflation.
- Higher US interest rates make the Dollar more attractive, putting downward pressure on currencies like the Pound whose central banks are considering rate cuts.
Technical Analysis: GBP Below Resistance
- The GBP/USD pair failed to break above 1.2570 resistance and the 20-day EMA, suggesting short-term uncertainty.
- The failed breakout from the Head and Shoulders pattern also points towards potential downside.
- The RSI hovering around 40 indicates indecisiveness among investors.
