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During Wednesday's Asian session, the GBP/USD pair struggles to surpass the 200-hour Simple Moving Average (SMA) and edges lower. Spot prices erode a portion of yesterday's strong gains to a new weekly high and are presently trading just below the mid-1.2700s, down less than 0.10% on the day.

Fears that the British economy will enter a recession, especially after the Bank of England's (BoE) unexpected 50 bps rate hike, discourage traders from placing aggressive bullish wagers on the British Pound. In turn, this is acting as a headwind for the GBP/USD pair, although a modest decline in the US Dollar (USD) should limit the downside, at least for the time being. Traders may also choose to remain on the sidelines until BoE Governor Andrew Bailey and Fed Chair Jerome Powell's panel discussion at the ECB Forum on Central Banking in Sintra on Wednesday evening.

Technically, the recent repeated failures to find bearish acceptance below the 1.2700 level and the subsequent upward movement suggest that the corrective pullback from a 14-month low may have reached its conclusion. Before placing new wagers, bulls may need to wait for sustained strength to surpass the 200-hour simple moving average, which is currently located in the 1.2755-1.2760 region. With oscillators on hourly and daily charts remaining in positive territory, the GBP/USD pair could reclaim the 1.2800 level and look to challenge the yearly high, which was reached on June 16 in the mid-1.2800s.

In contrast, bearish traders will view a convincing break and acceptance below the round number 1.2700 as a new trigger. The GBP/USD pair could then accelerate its decline towards the next significant support zone near 1.2635 en route to the 1.2600 level. Some follow-through selling will make spot prices susceptible to accelerating the decline towards the psychological level of 1.2500, with some intermediate support near the region of 1.2530-1.2525.

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