GBP/USD holds steady above mid-1.3500s, weekly high ahead of US data/FOMC minutes

• A combination of supporting factors pushed GBP/USD higher for the second straight day.
• Receding Russia-Ukraine tensions undermined the safe-haven USD and extended support.
• Stronger UK CPI boosted BoE rate hike bets and provided an additional boost to the major.
• Brexit uncertainties capped gains ahead of US macro data and the FOMC meeting minutes.

The GBP/USD pair extended its steady intrada ascent through the mid-European session and climbed to a fresh weekly high, around the 1.3575 region in the last hour.

The pair built on the overnight bounce from the two-week low, around 1.3485 region, and gained traction for the second successive day on Wednesday. Receding Russia-Ukraine tensions continued undermining the safe-haven US dollar, which, in turn, was seen as a key factor that acted as a tailwind for the GBP/USD pair.

The British pound was further supported by hotter than expected UK consumer inflation, which rose at the fastest annual pace in nearly 30 years in January. In fact, the headline CPI edged higher to 5.5% YoY rate from 5.4% previous and strengthened the case for additional rate hikes this year by the Bank of England.

That said, tensions over the Northern Ireland Protocol held back traders from placing aggressive bullish bets around sterling and capped gains for the GBP/USD pair. Investors also seemed reluctant and preferred to wait on the sidelines ahead of the release of the FOMC meeting minutes, later during the US session.

It is worth mentioning that the markets have been expecting a more aggressive policy response by the Fed amid the persistent rise in inflationary pressures and pricing in a 50 bps rate hike in March. Hence, the minutes will be looked upon for clues about the likely pace of the Fed's policy tightening cycle.

This will play a key role in influencing the near-term USD price dynamics and provide some meaningful impetus to the GBP/USD pair. In the meantime, the US economic docket, highlighting the release of monthly Retail Sales, will be looked upon for short-term opportunities later during the early North American session.

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