- GBP/USD is likely to pull back from recent highs with rising USD purchases evident on Tuesday.
- Concerns over a dovish stance from the Fed and ongoing US financial issues seem to overshadow significant gains for the dollar.
- Traders are focusing on the Bank of England’s monetary policy report, anticipating insights before upcoming job data is released.
The GBP/USD pair has started to see some selling during Tuesday’s Asian session, retracting from the 1.3560 level reached after a few days of gains. It seems that bearish traders are taking note, given that prices have dipped to around 1.3515, marking a low in recent hours.
The USD index (DXY), which measures the dollar against other currencies, is bouncing back from a six-week low hit on Monday. This rebound appears to be pressuring the GBP/USD pair. However, meaningful gains for the USD appear uncertain, mainly due to expectations that the Federal Reserve might ease borrowing costs later this year as inflation pressures show signs of subsiding.
Moreover, worries surrounding the US fiscal landscape and tensions in US-China trade could also limit the dollar’s rise. On the other hand, the British pound might find some support, particularly with market expectations that the Bank of England will hold off on rate cuts at its upcoming meeting on June 18, which may help restrain further losses for the GBP/USD pair.
Traders might also be waiting for the BOE’s Monetary Policy Report hearing before Congress. Investors are likely to analyze remarks from BOE Governor Andrew Bailey and other Monetary Policy Committee members for guidance on future policy directions. Additionally, later in the morning North American session, US job data and remarks from Fed officials could influence both the USD and the GBP/USD pair.
