GBP/USD hits a second day of downside ahead of key US data

• GBP/USD fell for a second consecutive session as Cable bets pull back.
• The UK side of the data docket remains light for the remainder of the week.
• Fed Meeting Minutes revealed a staunchly apprehensive Fed, key US data ahead.

GBP/USD pared further gains on Wednesday, stumbling for a second straight session and easing back below 1.3500 after a failed attempt to recapture 1.3600 earlier this week. Sterling markets are pulling back from the top end of a bull run that dragged Cable into multi-year highs, however momentum still favors Pound Sterling bidders.

The Federal Reserve's (Fed) latest Meeting Minutes from the Federal Open Market Committee's (FOMC) rate meeting on May 6-7 revealed that the Fed's wait-and-see approach has deep roots. Policymakers at the latest Fed meeting noted that the US Dollar's (USD) safe-haven status has taken a hit recently. They cautioned that a more "durable shift" in the Greenback's status could have lasting impacts on the US economy.

Nearly all FOMC members at the May rate meeting agreed that inflation risks could prove to be more "persistent than expected". With Fed staff directly citing tariff impacts as a key driver in the FOMC's weakening outlook on the US economy, the FOMC has laid decaying US economic conditions and the hazy outlook on inflation and growth at the feet of the Trump administration's whipsaw tariff policies.

The rest of the trading week remains heavy on the US side. US Q1 Gross Domestic Product (GDP) growth is slated for Thursday. Friday will wrap up the trading week with US Personal Consumption Expenditure Price Index (PCE) inflation data for April. Markets are hoping for a continued easing in key inflation metrics before the fallout from the Trump administration's tariff policies begins to leak into headline datasets.

GBP/USD price forecast

Cable remains caught in a bearish downturn with bids sinking into 1.3450. However, price action remains firmly planted in bull country, with daily candlesticks running well north of the 50-day Exponential Moving Average (EMA) near 1.3210.

Overall, the Pound Sterling has been on a tear in 2025, rising 11.3% bottom-to-top from mid-January's multi-month bottoms at the 1.2100 handle. Cable has entirely reversed losses through the last quarter of 2024, rising to multi-year highs near 1.3450 this week.

GBP/USD daily chart