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  • GBP/USD witnessed some intraday selling for the second straight session on Wednesday.
  • The downfall was sponsored by some cross-driven weakness stemming from the EUR/GBP.
  • Sliding US bond yields undermined the USD and helped limit losses ahead of FOMV minutes.

The GBP/USD pair recovered around 40-50 pips from weekly lows, albeit lacked any strong follow-through buying and was last seen trading in the neutral territory, above the 1.3800 mark.

The pair extended the previous day’s sharp retracement slide from over two-week lows and witnessed some follow-through selling through the first half of the trading action on Wednesday. The downfall lacked any obvious catalyst and could be solely attributed to some cross-driven weakness stemming from the ongoing recovery in the EUR/GBP pair.

The GBP/USD pair tumbled to four-day lows, albeit managed to find decent support near a short-term ascending trend-line, around the 1.3770 region. The ongoing decline in the US Treasury bond yields dragged the US dollar to two-week lows. This, in turn, was seen as a key factor that helped limit any further losses for the major, at least for now.

The upside, however, remained limited as investors now seemed reluctant to place any aggressive bets ahead of Wednesday’s release of the FOMC meeting minutes. Investors have been pricing in the prospects for an earlier than anticipated Fed rate hike amid the upbeat US economic outlook, thanks to the impressive pace of coronavirus vaccinations.

This, along with US President Joe Biden’s spending plan, has been fueling speculations for an uptick in US inflation and raised doubts that the Fed will retain ultra-low interest rates for a longer period. Hence, the minutes will be closely scrutinized for clues on any discussion about the conditions to begin tightening.

Apart from this, Fed Chair Jerome Powell’s speech on Thursday will now play a key role in influencing the near-term USD price dynamics. This would assist investors to determine the next leg of a directional move for the GBP/USD pair.

Technical levels to watch