GBP/USD rises on edge of modest USD decline, remains below mid-1.3300s

• GBP/USD draws some buy-side on Thursday amid a modest drop in the USD.
• Bets on another 50 bps Fed rate cut and a positive risk tone undercut the USD.
• The BoE’s relatively measured stance remains supportive ahead of Powell’s speech.

GBP/USD regains some positive traction during the Asian session on Thursday and reverses some of the overnight sharp pullback slide from the 1.3430 region, or the highest level since March 2022. Spot prices are currently trading around the 1 .3335-1.3340, up just over 0.10% on the day and look poised to resume the recent uptrend seen over the past two weeks or so.

Despite several Federal Reserve (Fed) officials this week trying to play down market expectations for more aggressive policy easing going forward, investors still appreciate the higher chances of a rate cut in November. This, along with the underlying bullish sentiment around global financial markets, is failing to help the US Dollar (USD) capitalize on Wednesday’s solid rebound from the vicinity of YTD lows. This, in turn, is seen as a key factor providing support to the GBP/USD pair.

Apart from this, expectations that the Bank of England (BoE) rate cut cycle is more likely to be slower than in the United States (US) continue to support the pound sterling (GBP) and contribute to intraday gains in the GBP pair /USD. . Still, bullish traders may choose to wait for more clues about the Fed’s rate cut path before positioning for any further appreciation moves. The focus therefore remains on speeches by influential FOMC members, including Fed Chairman Jerome Powell, who will lead the USD and provide fresh impetus.

Traders will continue to look to the US economic record on Thursday – which includes the release of the final print of second-quarter GDP, weekly initial jobless claims and durable goods orders – to take advantage of near-term opportunities later during the opening session in North America. Meanwhile, the aforementioned fundamental context suggests that the path of least resistance for the GBP/USD pair remains to the upside. Therefore, any significant corrective decline could still be seen as a buying opportunity and is more likely to remain limited.