GBP/USD rebound prods 1.2900 as IMF defends UK growth forecasts, hawkish BoE bets increase, Fed eyed

• GBP/USD edges higher after reversing from two-week low, snapping seven-day losing streak.
• Cable rises as IMF keeps UK growth forecasts unchanged, BoE likely to announce two more rate increases in 2023 before policy pivot.
• US Dollar pullback, risk-on mood also allow Pound Sterling to better prepare for Fed announcements.

GBP/USD bulls take a breather around 1.2900 during early Wednesday morning in Asia, reversing from a two-month low, as well as snapping a seven-day-long losing streak, amid the broad US Dollar pullback. Apart from that, the International Monetary Fund’s (IMF) economic projections for the UK and Reuters’ poll about the Bank of England’s (BoE) next move also propel the Cable pair.

That said, the risk-on mood allowed the US Dollar to retreat from a multi-day high. Also weighing on the greenback, as well as fueling the Pound Sterling price, could be the market’s preparations for today’s Federal Open Market Committee (FOMC) monetary policy meeting announcements.

It’s worth noting that the upbeat statements from China Communist Party's Politburo meeting and China state planner National Development and Reform Commission (NDRC), suggesting more stimulus from Beijing, bolstered the sentiment the previous day. On the same line could be the recently downbeat statistics from the major economies which flag the end of the rate hike trajectory at the key central banks.

Elsewhere, the IMF sticks to 0.4% forecasts of the 2023 UK Gross Domestic Product (GDP) and relied on heaper energy, better relations with the European Union and calmer financial markets, per Reuters, as the key catalysts to propel the British Pound (GBP). Furthermore, the Reuters poll about the Bank of England’s (BoE) suggests that the Old Lady, as the BoE is informally known, is likely to announce two more rate hikes in 2023, which in turn favor GBP/USD bulls.

Additionally, Reuters’ news stating China state banks’ defense of the Yuan (CNY), by selling the US Dollar, also seemed to have weighed on the US Dollar. That said, the US Dollar Index (DXY) reversed from a two-week high by falling to 101.26 at the latest.

On a different page, the risk-on mood fails to justify upbeat US data as the US Conference Board (CB) Consumer Confidence jumped to 117.0 for July from 110.10 prior (revised) versus market forecasts of 112.10. The survey details unveiled that the one-year consumer inflation expectations edged lower to 5.7% while the Present Situation Index and  Consumer Expectations Index rose to 160.0 and 88.3 in that orders for the said month. That said, the US Housing Price Index for May reprinted the 0.7% MoM growth compared to analysts’ estimation of 0.2% whereas the S&P/Case-Shiller Home Price Indices also repeated the -1.7% YoY figures for the said month versus -2.2% expected.

While portraying the mood, Wall Street benchmarks closed on the positive side for the second consecutive day while the US 10-year Treasury bond yields rose to the highest levels in three weeks before ending Tuesday’s trading near 3.89%.

Moving on, a light calendar at home and the pre-Fed anxiety may allow the GBP/USD pair to consolidate the recent gains. However, the risk catalysts can entertain the Cable pair ahead of the Fed announcements.

Technical analysis

An upside break of an eight-day-old descending resistance line, now immediate support around 1.2875, allows GBP/USD to remain bullish on a key day. That said, the 1.3000 psychological magnet will lure the Cable pair buyers past 1.2875.