Important Events Today:

08:30 UTC: USD – Composite PMI Index.

12:30 UTC: USD – Initial Jobless Claims.

14:00 UTC: USD – ISM Non-Manufacturing PMI.

18:00 UTC: USD – FOMC Meeting Minutes.

The Pound-dollar pair is attempting to extend a strong bounce from the 1.2615 area, or multi-day lows, and is trading in a narrow range during the Asian session on Wednesday. Spot prices remain within a familiar range that has held for the past two weeks, currently trading just below the key 1.2700 level.

Concerns about Thursday’s upcoming general elections in the UK act as a headwind for the British Pound (GBP). On the other hand, the US Dollar (USD) is trying to attract significant buyers after Fed Chair Jerome Powell’s soft comments on Tuesday, stating that the US economy has made significant progress on inflation and is on a path to disinflation.

Powell’s comments confirm market expectations that the Fed is likely to begin a rate-cutting cycle in September and again reduce borrowing costs in December. This, along with a slight decline in US Treasury yields, keeps Dollar bulls on the defensive, which in turn acts as a tailwind for the GBP/USD pair. Meanwhile, expectations that the Trump presidency will be more inflationary than the Biden administration should limit the decline in US bond yields and the US Dollar.

Meanwhile, Wednesday’s economic agenda in the US, including the ADP private employment report and the ISM Services PMI, could provide some momentum for the GBP/USD pair. However, the immediate market reaction is likely to be limited ahead of key events.

Recommendations: Watch the 1.2700 level, establish Buy positions on a firm break above. Look for selling opportunities on rebounds.