GBP/USD bears flexing ahead of FOMC minutes

• GBP/USD bears are in the market and eye a break of daily support.
• US FOMC minutes are coming up and could be a catalyst. 

GBP/USD is down some 0.28% ahead of the Federal Open Market Committee minutes that come out at the top of the hour. The pair has sunk from a high of 1.2469 and has reached a low of 1.2357 so far.  Net GBP speculators’ positions surged higher and have now been positive for five consecutive weeks, which leaves the prospects of a move into the length compelling for the foreseeable future.

The minutes could be a catalyst for a move higher in the US Dollar reflecting a hawkish bias at the Fed. There will also be a number of Fed speakers in the coming days that could tilt the bias further in favor of the US Dollar bulls.

´´A rapidly shifting macro backdrop is making matters more challenging for Fed officials: Inflation remains uncomfortably elevated while lingering banking-sector stress is making the outlook increasingly blurry,´´ analysts at TD Securities argued. ´´We expect the minutes to expand on the Fed's policy views amid these uncertainties, with officials split on what to do next. A June hike is likely to stay on the table.´´

On the other hand, there are a number of variables, including the debt ceiling debacle and the recent slew of less bad UK economic data which led to an upgrade of the BoE’s UK GDP and inflation forecasts at its May policy meeting could keep the pair underpinned. 

GBP/USD daily chart

GBP/USD bears are heading into a key area of critical support. A break of the 1.2350s could open the path for lower for longer on the charts. 

On the 4-hour charts, however, a correction is feasible towards trendline resistance that meets the 38.2% Fibo and market structure as follows: