GBPUSD was down for the second successive session on Wednesday as traders put their bets on the dollar ahead of the Fed’s interest rate decision. Federal Open Market Committee (FOMC) members are largely expected to vote to keep the rates unchanged at 4.50%, although there has been recent pressure from President Donald Trump to lower borrowing costs.
The cable had been on an upward momentum in recent days, gaining +0.8% in the last five sessions. However, the dollar has resurged against the pound this week, propelled by rising yields on US treasury bonds. That said, traders are optimistic about the GBPUSD upside prospects following bullish speeches by UK Prime Minister Keir Starmer and Treasury Chancellor Rachel Reeves this week.
Starmer was upbeat that trade relations between the UK and the US are about to get even better at a time when there has been widespread tension about President Trump’s tariff rhetoric. On the other hand, Reeves said on Wednesday that the government was confident about the trajectory of the UK’s economy and would remove stifling and unpredictable regulations.
The news augurs well for the pound sterling, which could come under increased pressure if the Bank of England slashes UK interest rates in early February as widely expected. Down the line, the GBPUSD will be impacted by the US Personal Consumption Expenditure (PCE) data expected out on Friday.
GBPUSD Prediction
The momentum on GBPUSD favours the pair to stay on the downward trajectory below the pivot mark at 1.2428. Immediate support will likely be at 1.2392. However, a stronger downward momentum will extend the decline to potentially test the second support at 1.2358.
Alternatively, moving above 1.2428 will strengthen the buyers to take control. That momentum will likely push the GBPUSD trading pair higher to encounter the first resistance at 1.2456. Breaking above that level will invalidate the downside narrative and potentially test 1.2482.
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