Ella 
GBP/USD extended gains below the psychological 1.2700 mark during early Asian trade on Tuesday. Minutes of the FOMC meeting showed that the Federal Reserve reiterated its data-driven approach, leading to a more dovish outlook, which put pressure on the US dollar (USD) and helped GBP/USD. As of press time, GBP/USD was trading at 1.2685, an intraday increase of 0.02%.
Testimony to the Treasury Committee last week from Bank of England (BOE) Governor Andrew Bailey and other policymakers sparked speculation of a delay in interest rate cuts, boosting the pound (GBP). Bailey said he would not predict how many rate cuts there would be, but that the central bank was on a path to do so.
He further pointed out that the central bank’s stance has changed from how tight policy needs to be and how high interest rates need to be, to how long the Bank of England needs to maintain this stance to achieve sustained inflation. Markets have priced in four rate cuts at the end of the year after the Bank of England decided to keep interest rates unchanged at 5.25% earlier this month.
On the other hand, New York Federal Reserve (Fed) President John Williams said last week that the central bank is still expected to cut interest rates later this year despite stronger-than-expected inflation and labor market data in January. However, Fed Chairman Jerome Powell stressed last week that a rate cut in March was unlikely, while several Fed officials preferred to wait for more evidence of inflation data before cutting rates. Investors have priced the first rate cut for the June meeting or later.
