GBP/USD Weakens Amid Caution Ahead of Fed Powell’s Speech

The GBP/USD pair has retraced to 1.2618 against the US Dollar (USD) during Tuesday’s London session. The pair's weakness is attributed to risk aversion among market participants, driven by uncertainty ahead of Federal Reserve (Fed) Chair Jerome Powell’s upcoming speech and the United States (US) Nonfarm Payrolls (NFP) data for June, scheduled for release on Friday.

From a technical standpoint, the GBP/USD pair is moving towards a clear support/Demand area around 1.2540, which appears to be its next target.

Powell is expected to provide crucial insights into when the central bank might begin lowering its key borrowing rates. This week, investors will closely monitor labor demand and wage growth data to determine if the Fed will consider reducing interest rates starting from the September meeting, as suggested by the 30-day Federal Fund futures pricing data from the CME FedWatch tool.

Given the current market conditions, we are anticipating a bearish continuation towards the Demand area around 1.2540. Once this level is reached, we will look for a potential long position from that area.

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