GBP/USD fell on Tuesday and remained under pressure even after rallying from sub-1.23 lows after U.S. ECI and home sales data lifted dovish Fed expectations, though the data-related rise is likely to be short-lived with cable capped near recent highs by 1.24 pre-Fed.
Futures markets have been pricing in a reduction in Fed rate hikes from 50bp to 25bp over the next two meetings, with data hinting that inflation is slowing, but price growth remains elevated, making the case for shifting from higher-for-longer to a more dovish stance unlikely.
On the UK side of the equation, markets expect a 50bp hike Thursday and traders will pay keen attention to the nature to the vote count, with a dovish tightening move likely to send GBP/USD hurtling lower, targeting the 30-day moving average at 1.2189 and the Jan.
12 low at 1.2089 coming quickly into focus.
For more click on FXBUZ