The GBP/USD Remains Below 1.2500 Prior to the BoE's Rate Decision

The GBP/USD pair maintains its defensive stance near 1.2495 during the early Asian session on Thursday. The dollar has gained an inch higher for the third day in a row, which is detrimental to the major pair. Ahead of the Bank of England's (BoE) interest rate decision later in the day, traders adopt a cautious stance, anticipating no change in the rate. Thursday is also the due date for the US weekly Initial Jobless Claims, which will be followed by a speech by Federal Reserve (Fed) Mary Daly.

Fed officials have provided some indications in the absence of high-quality economic data from the United States earlier this week. Wednesday, Boston Fed President Susan Collins stated that bringing inflation down to the 2% objective will require more time than had been previously estimated, emphasizing that the rate will likely remain elevated for an extended period of time. John Williams, president of the Federal Reserve Bank of New York, and Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, both demonstrated their support for maintaining interest rates at their present levels for an extended period. The hawkish remarks made by policymakers at the Federal Reserve offer some assistance to the United States Dollar (USD) and generate a tailwind for the GBP/USD pair.

Last week, the FOMC committee made the decision to maintain current interest rates. The unexpectedly high inflation data from the United States has prevented officials from reducing borrowing costs. This year, financial markets anticipate fewer than two cutbacks, compared to the maximum of six that was observed at the start of 2024.

On the contrary, it is probable that the BoE will maintain the key interest rate at 5.25% during its May meeting on Thursday. The declining trajectory of inflation in the United Kingdom, on the other hand, has sparked speculation that the Bank of England (BoE) could reduce its interest rate prior to the Federal Reserve of the United States. On Thursday, investors will be more influenced by the BoE's Bailey and Pill speeches. Should BoE policymakers persist in their dovish position, the Pound Sterling (BoE) could experience additional depreciation.