GBP/USD Price Forecast: Consolidates below mid-1.2500s, not out of the woods yet

• GBP/USD struggles to gain any meaningful traction and languishes near a multi-month trough.
• The Fed's hawkish shift underpins the USD and caps the upside amid the BoE's dovish stance. 
• The recent failures near the 200-period SMA hurdle on the 4-hour chart favor bearish traders. 

The GBP/USD pair consolidates in a range below mid-1.2500s during the Asian session on Tuesday and remains within striking distance of its lowest level since May touched last week. Moreover, the fundamental backdrop and the technical setup suggest that the path of least resistance for spot prices remains on the downside. 

The US Dollar (USD) stands firm near a two-year peak and continues to draw support from the Federal Reserve's (Fed) hawkish signal that it would slow the pace of interest rate cuts in 2025. The British Pound (GBP), on the other hand, is undermined by the  Bank of England's (BoE) split vote decision to leave interest rates unchanged and a dovish outlook. This, in turn, validates the near-term negative outlook for the GBP/USD pair.

From a technical perspective, the recent repeated failures near the 200-period Simple Moving Average (SMA) on the 4-hour chart and the lack of any meaningful buying reaffirm the bearish bias. Given that oscillators on the daily chart are holding deep in the negative territory, the GBP/USD pair could challenge the 1.2500 psychological mark. Some follow-through selling will confirm a breakdown and pave the way for deeper losses. 

The subsequent fall has the potential to drag spot prices to the May swing low, around the 1.2445 region, en route to the 1.2400 mark and the year-to-day trough, around the 1.2300 round figure. The latter should act as a strong base for the GBP/USD pair and help limit the downside amid the year-end thin trading volumes.

On the flip side, the 1.2600 mark is likely to act as an immediate hurdle, above which a bout of a short-covering could lift spot prices to the 200-period SMA on the 4-hour chart, currently pegged near the 1.2680 region. This is closely followed by the 1.2700 round figure, which if cleared decisively will set the stage for some meaningful recovery and push the GBP/USD pair towards the 1.2735 zone intermediate hurdle en route to the 1.2775-1.2780 supply zone.

GBP/USD 4-hour chart