GBP/USD remains on the defensive below 1.2600, eyes on US data, Fed’s Powell speech

• GBP/USD trades on a weaker note near 1.2575 on Wednesday.
• Many Fed officials see three rate cuts as reasonable this year.
• Traders raise their bets the BoE will cut the interest rate before the US Fed this year, weighing on the GBP.
• The US ADP Employment Change, the ISM Services PMI, and Fed’s Powell speech will be the highlights on Wednesday.

The GBP/USD pair trades with a negative mild bias around 1.2575 despite the decline of the US Dollar on Wednesday. The major pair remains vulnerable due to slowing UK inflation and a dismal market mood. The Fedspeak on Wednesday will be closely watched by traders, as it might offer some hints about the interest rate trajectory and policy outlook.

Many Fed officials spoke about the monetary policy outlook on Tuesday. Cleveland Fed Bank President Loretta Mester said that she still expects interest rate cuts this year, but ruled out the next policy meeting in May. San Francisco Fed Bank President Mary Daly also anticipates rate cuts this year but not until there’s more evidence that inflation has cooled down. San Francisco Fed President Daly said that three rate cuts this year are a “very reasonable baseline” though nothing is guaranteed. According to the CME FedWatch Tool, investors are now pricing in about a 65% odds of a rate cut by June, down from about 70% after the Fed's March meeting.

On Tuesday, the US February JOLTS Job Openings climbed to 8.756M in February from a downwardly revised 8.748M in January, better than the market estimation. Meanwhile, the Factory Orders improved to 1.4% MoM in February from a 3.8% fall in the previous reading.

On the other hand, traders raise their bets the Bank of England (BoE) will cut the interest rate before the US Fed this year, which exerts some selling pressure on the Pound Sterling (GBP). Additionally, easing UK inflation and a dismal market mood might weigh on the GBP and cap the upside of the GBP/USD pair.

Market players will keep an eye on the US ADP Employment Change, the final S&P Global Composite PMI, and the ISM Services PMI. Also, the Fed's Bowman, Goolsbee, Barr, Kugler, and Powell are set to speak later on Wednesday. If the Fed officials deliver any dovish comments, this could weigh on the Greenback and create a tailwind for the GBP/USD pair in the near term.