GBP/USD slides towards 1.2000 as Cable traders await Fed/BoE talks, UK GDP

• GBP/USD takes offers to refresh monthly low, prints three-day downtrend.
• Dovish concerns surrounding BoE contrasts with the latest rebound in Fed outlook to favor Cable bears.
• Healthcare strikes, the worst monthly Services PMI in two years also weigh on GBP/USD.
• Second-tier catalysts to entertain traders for the day, Fed’s Powell, UK Q4 GDP eyed for clear directions.

GBP/USD stands on slippery grounds as it extends the previous weekly downturn towards 1.2000 psychological magnet, down for the third consecutive day near 1.2030 by the press time. In doing so, the Cable pair justifies downbeat catalysts surrounding the UK and the Bank of England (BoE) while also taking clues from the recently hawkish bias for the Federal Reserve (Fed) ahead of Chairman Jerome Powell’s speech.

Last week, the Bank of England (BoE) announced a 0.50% interest rate hike by matching the market expectations. Following the interest rate announcements, BoE Governor Andrew Bailey said, “BoE's forecast suggests inflation will come down, fall quite sharply.”

Asked if rates might have peaked, says "we have changed the language we used." BoE’s Bailey also added, "Change in language reflects a turning in the corner but very early days."

On a different scenario, BoE Chief Economist Huw Pill told Times Radio on Friday that it's important for the BoE to not do "too much" on monetary policy, per Reuters.

Not only the downbeat comments from BoE officials but the weakest performance of the UK Services PMI in two years, to 48.7 versus 49.9 prior, also weighs on the GBP/USD prices. Additionally, the UK’s healthcare strikes add strength to the pessimism surrounding the British economy. “Britain faces its largest ever strike by health workers on Monday as tens of thousands of nurses and ambulance workers walk out in an escalating pay dispute which the health minister said would place a further strain on the National Health Service (NHS),” reported Reuters.

On the other hand, the Fed announced 0.25% dovish rate hike but managed to regain the hawks’ attention following the strong US jobs report and activity data. That said, the US Bureau of Labor Statistics (BLS) surprised markets by revealing that the Nonfarm Payrolls (NFP) rose by 517K in January, versus 185K expected and 260K (upwardly revised) prior. It’s worth noting that the Unemployment Rate also dropped to 3.4% from 3.5% prior and 3.6% expected but the Average Hourly Earnings eased during the stated month. Furthermore, the rebound in the US ISM Services PMI from 49.2 to 55.2, versus 50.4 expected, also underpinned the rebound in the United States Treasury bond yields and the US Dollar.

Amid these plays, the US 10-year Treasury bond yields remain firmer for the third consecutive day, to 3.56% by the press time, following the biggest weekly jump since late September 2022. Further, the S&P 500 Futures print mild losses and underpin the US Dollar’s safe-haven demand.

Moving on, a light calendar in the UK may allow the GBP/USD bears to keep the reins. However, Tuesday’s speech from Federal Reserve (Fed) Chairman Jerome Powel and Friday’s UK data dump, including the fourth quarter (Q4) Gross Domestic Product (GDP) will be crucial for the pair traders to watch for clear directions. Additionally important are comments from various BoE officials scheduled for publishing during the week.

Technical analysis

A clear downside break of a four-month-old ascending trend line, around 1.2145 by the press time, directs GBP/USD bears towards the 200-DMA support surrounding 1.1950.