GBP/USD still faces resistance at 1.2800 before Fed’s Powell’s second testimony

GBP/USD remained tepid for the second day in Asia on Wednesday, trading around 1.2780. The decline in GBP/USD can be attributed to the strengthening of the US dollar, which gained momentum after Federal Reserve Chairman Jerome Powell testified before the US Congress on Tuesday. Powell acknowledged that inflation data has improved, but reiterated the Fed’s cautious stance.

Further improvement in economic data will increase our confidence in controlling inflation, said Federal Reserve Chairman Jerome Powell. It would be inappropriate to lower the policy rate until the Fed has greater confidence that inflation levels are moving toward 2% on a sustained basis.” Fed Chairman Powell also pointed out that “the first quarter data does not support the Fed’s greater confidence in the path to controlling inflation, which is what the Fed needs to cut interest rates.

Traders expect Federal Reserve Chairman Jerome Powell to deliver his second semi-annual testimony on Wednesday, and Federal Reserve officials Michelle Bowman and Austan Goolsbee will also speak. In addition, the market will also focus on the US Consumer Price Index (CPI) data scheduled for release on Thursday.

In the UK, Bank of England (BOE) policymaker Jonathan Haskel suggested keeping current interest rates unchanged due to persistent price pressures in the job market. According to Reuters, Haskel stressed: “I prefer to keep interest rates stable until we see more clear signs that underlying inflationary pressures have really weakened.”

As the focus turns to the upcoming economic indicators, the pound (GBP) has been suppressed against major currencies. Specifically, investors are looking forward to the UK’s monthly gross domestic product (GDP) data and May factory data scheduled for release on Thursday.

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