GBP/USD finds some support near mid-1.1400s, eyes BoE for fresh impetus

• GBP/USD edges lower on Wednesday amid a strong bullish sentiment surrounding the USD.
• The new UK PM’s efforts to ease the cost of living crisis offer support to the British pound.
• Investors eye BoE’s Monetary Policy Report Hearings for some impetus ahead of Fedspeak.

The GBP/USD pair extends the previous day's retracement slide from levels just above the 1.1600 mark and edges lower through the first half of trading on Wednesday. The intraday slide, however, stalls just ahead of a two-and-half-year low touched earlier this week and allows spot prices to bounce back to the 1.1500 psychological mark.

Markets appear to endorse the new UK Prime Minister Liz Truss' efforts to ease the current cost of living crisis. This, along with rising bets for more aggressive interest rate hikes by the Bank of England, acts as a tailwind for the British pound and offers some support to the GBP/USD pair. Hence, the focus remains on the BoE Monetary Policy Report Hearings, due later this Wednesday.

Investors will be looking for clues about the possibility of a supersized 75 bps rate hike in September, which, in turn, might influence sterling and provide some meaningful impetus to the GBP/USD pair. In the meantime, the prevalent strong bullish sentiment surrounding the US dollar continues to exert some downward pressure on the major, warranting caution before placing any bullish bets.

Investors seem convinced that the Fed will stick to its aggressive policy tightening path and have been pricing in a 75 bps rate hike at the next FOMC meeting on September 20-21. Hawkish Fed expectations remain supportive of elevated US Treasury bond yields. This, along with recession fears, lift the safe-haven buck to a fresh two-decade high and seems to weigh on the GBP/USD pair.

Market participants now look forward to scheduled speeches by influential FOMC members, which could drive the USD demand amid absent relevant market-moving economic releases. This, along with the broader risk sentiment, could produce short-term trading opportunities around the GBP/USD pair.

Technical levels to watch