GBP/USD consolidates near one-week high, holds above 1.2700 ahead of BoE's Pill

• GBP/USD oscillates in a narrow band just below a one-week high touched on Wednesday.
• A modest USD rebound from the 200-day SMA is seen acting as a headwind for the major.
• Bets for more rate hikes by the BoE continue to underpin the GBP and limit the downside.
• Traders now look to BoE's Pill for a fresh impetus ahead of the US PCE Price Index data.

The GBP/USD pair consolidates its weekly gains registered over the past three days and seesaws between tepid gains/minor losses through the Asian session on Thursday. Spot prices currently trade around the 1.2720 region, nearly unchanged for the day and just a few pips below a one-week high touched on Wednesday.

The US Dollar (USD) finds some support near a technically significant 200-day Simple Moving Average (SMA) and for now, seems to have stalled its recent pullback from the highest level since early June. This, in turn, is seen as a key factor acting as a headwind for the GBP/USD pair, though the prospects for further interest rate hikes by the Bank of England (BoE) might continue to lend support to the British Pound and warrant caution for bearish traders.

In fact, BoE Deputy Governor Ben Broadbent, speaking at the Jackson Hole Symposium on Saturday, said that policy rates may well have to remain in restrictive territory for some time as the knock-on effects of the surge in prices were unlikely to fade away rapidly. Apart from this, expectations that the Federal Reserve (Fed) will pause its rate-hiking cycle in September might cap the USD and contribute to limiting the downside for the GBP/USD pair.

Investors now seem convinced that the US central bank will soften its hawkish stance and the bets were lifted by the disappointing US macro data released on Wednesday. The ADP report showed that the US private-sector employers added 177K jobs in August, much lower than the previous month's downwardly revised reading of 324K. Moreover, the US Q2 GDP growth rate was also lowered to a 2.1% annualized pace from the 2.4% estimated orignally.

The aforementioned fundamental backdrop suggests that the path of least resistance for the GBP/USD pair is to the upside, though traders seem reluctant and look to a scheduled speech by BoE Chief Economist Huw Pill. Later during the early North American session, the release of the US Core PCE Price Index – the Fed's preferred inflation gauge – will influence the USD price dynamics and allow traders to grab short-term opportunities around the pair.

Technical levels to watch