GBP/USD sits near weekly high, just below mid-1.1900s ahead of US data/FOMC minutes

• GBP/USD scales higher for the second straight day and climbs to a fresh weekly high.
• Bets for less aggressive Fed rate hikes weigh on the USD and offer support to the pair.
• Better-than-expected UK PMI underpins the GBP and contributes to the positive move.
• Investors now look to US macro data for some impetus ahead of the key FOMC minutes.

The GBP/USD pair builds on the previous day's positive move and gains some follow-through traction for the second successive day on Wednesday. The pair maintains its bid tone through the early North American session and is currently placed near the weekly high, just below the mid-1.1900s.

A combination of factors keeps the US Dollar bulls on the defensive, which, in turn, is seen acting as a tailwind for the GBP/USD pair. Investors now seem convinced that the US central bank will slow the pace of its rate-hiking cycle and have been pricing in a greater chance of a relatively smaller 50 bps lift-off in December. This, along with a generally positive tone around the equity markets, continues to weigh on the safe-haven greenback.

The British Pound, on the other hand, draws support from reports that the UK government might look to pursue a Swiss-style relationship with the European Union. This comes on the back of expectations that the Bank of England will lift interest rates further to tame inflation. Furthermore, the flash UK PMIs showed that economic activity slowed less than expected in November, which is further underpinning the  Sterling and pushing the GBP/USD pair higher.

Apart from the aforementioned fundamental factors, the possibility of some short-term trading stops being triggered on a sustained strength beyond the 1.1900 mark provides an additional lift to spot prices. That said, a bleak outlook for the UK economy might keep a lid on any further gains for the GBP/USD pair. Traders might also refrain from placing aggressive bets and prefer to wait for the release of the FOMC minutes, due later during the US session.

In the meantime, the US economic docket - featuring the releases of flash PMIs, Durable Goods Orders, Weekly Initial Jobless Claims and New Home Sales - might provide some impetus to the GBP/USD pair. The market reaction to the US macro data, however, is more likely to be muted as investors await fresh clues about the Fed's policy outlook and future rate hike path. This will influence the USD price dynamics and determine the near-term trajectory for the major.

Technical levels to watch