Sterling rose on Wednesday, extending earlier gains to a brief session high of 1.2345 after ADP employment data hinted that the Fed's 425bp of hikes in 2022 may be stunting employment growth, lifting the pound away from trend lows just below 1.23 and back toward the 10-DMA at 1.2373.

The data may not sway the Fed away from a widely expected 25bp hike later on Wednesday as inflation remains well-above the U.S.
central bank's 2% target, and Chair Jerome Powell is likely to express continued vigilance and a bias for higher rates for longer.

However, the statement and the post-announcement presser will be dissected for hints at possible dissension among Fed members as they try to navigate between inflation fighting and recession avoidance.

The BoE will have its turn on Thursday, and any signs of diminished hawkishness could prompt GBP/USD to resume its slide away from 2023 highs near 1.2450, putting the Jan. 24 low at 1.2264 and daily cloud top at 1.2138 in sharp focus.

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