GBP/USD slips modestly from weekly high as traders await UK GDP

• Sterling retreats slightly amid quiet session as traders eye upcoming UK GDP figures.
• DXY softens to 100.77 after early week rally on US-China tariff truce; easing bets hold at 52 bps for 2025.
• Fed's Jefferson flags tariff-driven inflation uncertainty; BoE's Mann leans cautious on labor market resilience.

The Pound Sterling erases some of its earlier gains on Wednesday after reaching a weekly high of 1.3359, edges down 0.03% amid a lack of catalyst, as traders brace for the release of GDP figures for the UK. At the time of writing, the GBP/USD trades at 1.3293.

GBP/USD eases to 1.3293 after peaking at 1.3359, with BoE and Fed policy outlooks in focus ahead of key data releases

The Greenback has trimmed its gains from Monday, as depicted by the US Dollar Index (DXY). The DXY, which tracks the performance of the US Dollar against a basket of six currencies, rose sharply after news of the de-escalation of the China-US trade war. Nevertheless, as market participants had already factored the news into their expectations, the DXY fell by 0.15% to 100.77.

An absent economic docket in both sides of the Atlantic keeps investors entertained on Tuesday data. Although US inflation dipped modestly, market participants are expecting 52 basis points of easing, according to the swaps markets.

Federal Reserve Vice Chair Philip Jefferson stated that the current moderately restrictive policy rate is well-positioned to respond to economic developments. He added that tariffs could lead to high inflation, but he's still uncertain if the impact would be temporary or persistent.

In the UK, job figures cooled further, a relief for the Bank of England (BoE), which has been vocal about wages exerting upward inflationary pressure. Earlier, BOE's Catherine Mann said that she wanted to hold rates unchanged because he saw the labor market more resilient than expected.

The BoE is expected to ease policy by around 50 basis points by the end of the year, with the subsequent reduction expected in August.

Meanwhile, the US economic docket will feature the Producer Price Index (PPI), Retail Sales data, and Fed Chair Jerome Powell's speech on Thursday.

GBP/USD Price Forecast: Technical outlook

From a technical perspective, the GBP/USD is neutral to upward bias, but buyers must keep the exchange rate above 1.33. If achieve it, they need to drive the exchange rate past 1.3350 towards challenging the year-to-date (YTD) high of 1.3443.

Conversely, a daily close below 1.33 clears the path for a pullback, with the next key support being the 1.3200 figure. A breach of the latter will expose the current week low of 1.3139.