GBP/USD breaks below 1.3400 due to stronger US Dollar, BoE rate cut expectations

• GBP/USD depreciates as the US Dollar strengthens ahead of the upcoming US Personal Consumption Expenditures Price Index release.
• The Greenback appreciates as yields on 2-year and 10-year US Treasury bonds snap a four-day losing streak.
• The British Pound faces pressure amid rising expectations that the BoE will cut interest rates at its May policy meeting.

GBP/USD extends its decline for a second straight session, hovering near 1.3390 during Wednesday's Asian trading. The pair is under pressure as the US Dollar strengthens on renewed optimism surrounding US-China trade developments. Traders now turn their attention to the upcoming release of the US Personal Consumption Expenditures (PCE) Price Index for March, a key inflation gauge for the Federal Reserve.

The US Dollar Index (DXY), which measures the USD against six major currencies, remains comfortably above the 99.00 mark, meanwhile a rebound in US Treasury yields. Both the 2-year and 10-year yields on US bond coupons snapped a four-day losing streak, trading around 3.66% and 4.17%, respectively, at the time of writing.

On the data front, Tuesday's US JOLTS report revealed a drop in job openings to 7.19 million in March--its lowest level since September 2024--suggesting cooling labor demand. The figure fell short of expectations and highlighted rising economic uncertainty.

Adding to the GBP/USD pair downside, the British Pound (GBP) is weighed by growing expectations that the Bank of England (BoE) will cut rates at its May meeting. Softer inflation expectations in the United Kingdo (UK) and rising global economic headwinds have fueled dovish bets.

BoE policymaker Megan Greene recently commented that tariffs proposed by US President Donald Trump might lead to lower inflation in the UK, though significant uncertainties remain regarding the broader economic impact and recent tax hikes for employers.