GBP/USD faces barricades around 1.2300 as anxiety soars ahead of Fed/BOE policy

• GBP/USD has dropped to near 1.2250 after failing to surpass the 1.2300 hurdle.
• Market mood has turned cautious ahead of monetary policy meeting season.
• The Fed is set to sound ‘less-hawkish’ amid a decline In October’s inflation report and in line PPI numbers.

The GBP/USD pair has corrected to near 1.2250 after facing hurdles near the round-level resistance of 1.2300 in the early Asian session. The Cable has sensed selling pressure as investors are getting anxious ahead of the release of the monetary policies by the Federal Reserve (Fed) and the Bank of England (BOE).

The US Dollar index (DXY) is failing to recapture the round-level resistance of 105.00 as investors have shifted to the sidelines amid a cautious market mood. S&P500 faced heat on Friday and is expected to remain precautionary ahead as a further rate hike by the Fed is going to escalate recession fears in the United States economy. Meanwhile, the 10-year US Treasury yields are eyeing to capture the 3.60% hurdle as expectations of a hawkish Fed policy will trim demand for US Treasury bonds.

Post a surprise fall in October’s inflation report, a decline in consumer spending, and Friday’s Producer Price Index (PPI) data, Fed chair Jerome Powell is expected to sound ‘less hawkish’ than the new normal on Wednesday. The price Index for factory-gate rates was trimmed to 7.4% in line with expectations. A decline in prices for final products indicates a decline in demand, which forced producers to go easy on decision-making for end-products prices.

On the United Kingdom front, the BOE is set to hike its interest rates further by 50 basis points (bps), according to a Reuters poll. The United Kingdom's economy is in a recession led by an extreme debt crisis, weak economic prospects, and an absence of exhaustion in inflation. The inflation rate is looking to extend further as food-price inflation is soaring dramatically after escalating food supply crisis.