Pound Sterling Slides Amid Expectations of Early BoE Rate Cuts
The Pound Sterling (GBP) dipped toward the 1.2600 mark early in Wednesday's American session. Weakening sentiment stems from investor anticipation that the Bank of England (BoE) will initiate interest rate reductions ahead of previous forecasts, driven by recent signs of easing UK inflation. In an interview with the Financial Times, BoE Governor Andrew Bailey acknowledged that market expectations for rate cuts this year are plausible. He further noted diminishing signs of persistent inflation. Meanwhile, the US Dollar Index (DXY) has eased from 104.40.
Market attention now turns to the crucial US core Personal Consumption Expenditure (PCE) price index data for February, set for release on Good Friday. This release will significantly influence the US Dollar's trajectory.
The Pound Sterling has found some support near the 1.2600 level. The GBP/USD pair experienced resistance around 1.2660, leading to a slight decline. The pair currently hovers above the 200-day Exponential Moving Average (EMA), located near 1.2565. A sustained break below the 200-day EMA could signal further downward pressure.
The 14-period Relative Strength Index (RSI) has dipped close to 40.00. A drop below this level would likely trigger additional bearish momentum for the pair.