GBP/USD faces rejection near 1.2400 mark, retreats to daily low ahead of BoE

• GBP/USD surrenders its modest intraday gains, though the downside remains cushioned.
• Expectations that the Fed will cut rates later this year weigh on the USD and lend support.
• Traders also seem reluctant to place aggressive bets ahead of the key BoE policy decision.

The GBP/USD pair struggles to capitalize on its modest intraday uptick and attracts some sellers near the 1.2400 round-figure mark on Thursday. The pair retreat to the lower end of its daily range during the first half of the European session and is currently placed just above the mid-1.2300s as traders look to the Bank of England (BoE) policy decision.

The UK central bank is expected to raise interest rates for the 10th time in a row, by another 50 bps, to the highest level since autumn 2008. Investors, however, anticipate that the BoE is nearing the end of the current rate-hiking cycle amid hopes that price pressures may have peaked and looming recession risk. This, in turn, acts as a headwind for the British Pound and caps the upside for the GBP/USD pair.

That said, the downside remains cushioned, at least for now, as traders seem reluctant ahead of the key central bank event risk. Apart from this, the prevalent US Dollar selling bias might continue to lend some support to the GBP/USD pair. Worries that headwinds stemming from rising borrowing costs will lead to a sharp US economic slowdown and might force the Fed to reverse its hawkish stance continue to weigh on the buck.

Nevertheless, the aforementioned mixed fundamental backdrop warrants caution for aggressive traders and before positioning for the next leg of a directional move. From a technical perspective, a sustained strength beyond the 1.2440-1.2445 region, or a multi-month top, will be seen as a fresh trigger for the GBP/USD bulls. This, in turn, will pave the way for a move towards reclaiming the 1.2500 psychological mark.

Technical levels to watch