GBP/USD traded sideways on Wednesday, holding above its post-Powell 2023 low of 1.1811 as markets awaited more data to determine whether the Fed would re-accelerate rate hikes, with sterling vulnerable to deeper cycle lows on dovish BoE views.

Though GBP/USD has been performing better than currencies such as the yen and aussie thus far in 2023, it could begin to converge with laggards based on market suspicions that the BoE doesn't have the stomach for a tough inflation fight like the Fed's aggressive rate-hike campaign.

Even with a G7 leading 10.1% inflation rate, some BoE policymakers remain reluctant to tighten more, as demonstrated by comments from MPC member Swati Dhingra, who has voted to hold rates steady at the last two MPC meetings.

Downward pressures are likely to remain on cable as long as markets reckon doves will hold enough sway at the BoE to produce diverging rate paths between the UK and U.S.

That raises the potential for GBP/USD to fall to a series of November 2022 lows on the way to 1.1651.

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