Pound Weakens as Dollar Strengthens Ahead of FOMC Meeting Minutes

The British Pound (GBP) is weakening against the US Dollar (USD) as the latter gains strength ahead of the Federal Open Market Committee (FOMC) Meeting Minutes release. The GBP/USD pair is trading around 1.3250 during Asian hours on Wednesday, after modest gains the previous day. The USD's rise is driven by higher oil prices, which could reignite inflation concerns and boost expectations for further Federal Reserve (Fed) rate hikes.

Traders are awaiting the FOMC Meeting Minutes later in the day, but the downside for GBP/USD may be limited as easing expectations for Fed rate hikes, following last week's softer US jobs data, weigh on the Greenback. The CME FedWatch tool shows a nearly 20% probability of a Fed rate hike in October.

Scotiabank strategists note that G10 currencies are trading unevenly against the USD, with most showing gains into the North American session. Meanwhile, the British Pound could find support due to elevated energy costs and persistent inflation concerns, reinforcing expectations for higher Bank of England (BoE) interest rates for longer. BoE policymaker Catherine Mann warned that inflation above the 2% target could reach 4% around the turn of the year, adding further price pressures.

Technically, GBP/USD is trading at 1.3250, maintaining a bearish near-term tone as it remains below the nine- and 50-day Exponential Moving Averages (EMAs). The 14-day Relative Strength Index (RSI) at 39.3 suggests persistent downside pressure. Immediate resistance is seen at the nine-day EMA at 1.3259, with the 50-day EMA at 1.3387 acting as a denser technical barrier. As long as GBP/USD trades below this EMA cluster, the broader bias remains bearish.