GBP/USD holds below 1.2500 ahead of Fed rate decision

• GBP/USD trades on a weaker note near 1.2490 on Wednesday. 
• US Fed is anticipated to hold rates steady in its 5.25%-5.50% range for the sixth straight meeting on Wednesday.
• The dovish remarks of the BoE weigh on the Cable.

The GBP/USD pair holds below 1.2490 during the early Asian session on Wednesday. The downtick of the major pair is supported by the stronger US Dollar (USD) amid the cautious mood ahead of the US Federal Reserve's (Fed) interest rate decision later on Wednesday. 

On Tuesday, the US Conference Board's (CB) Consumer Confidence dropped to 97.0 in April from 103.1 in the previous reading, the lowest level since July 2022. Meanwhile, the Chicago Purchasing Managers' Index fell to 37.9 in April from 41.4 in March, below the market consensus of 44.9. This figure registered the lowest level since November 2022. Finally, the US Employment Cost Index (ECI) rose by 1.2% QoQ in Q1 2024 from a 0.9% rise in Q4 of 2023, beating the estimation of 1%. 

The US Fed is widely expected to hold rates steady for the sixth straight meeting on Wednesday. JPMorgan and Goldman Sachs anticipate the first cut in July, while Wells Fargo doesn't expect the first cut until September. Investors are now pricing in nearly 44% odds that the Fed will cut the rate in September, down from 60% at the beginning of the week, according to the CME FedWatch Tool. Market players will take more cues from Fed Chair Jerome Powell's Press Conference. The hawkish tone from the Fed might boost the Greenback and weigh on the GBP/USD pair. 

On the other hand, the dovish stance of the Bank of England (BoE) exerts some selling pressure on the Pound Sterling (GBP). BoE Governor Andrew Bailey is confident about cooling down inflation in the UK and sees market expectations for two or three rate cuts this year. Financial markets have priced in the first rate cut from the BoE in August, with 50 basis points (bps) expected.