GBP/USD Price Analysis: Consolidates above 1.2700 mark as traders await BoE policy update

• GBP/USD ticks lower on Thursday and snaps a three-day winning streak to the weekly top.
• The USD draws support from rebounding US bond yields and exerts pressure on the major.
• The downtick lacks follow-through as traders look to the BoE before placing directional bets.

The GBP/USD pair trades with a mild negative bias during the Asian session on Thursday and moves further away from the weekly low, around the 1.2740 area touched the previous day. Spot prices, however, hold above the 1.2700 mark as traders await the crucial Bank of England (BoE) monetary policy decision before placing fresh directional bets.

Heading into the key central bank event risk, the US Dollar (USD) attracts some buyers in the wake of a goodish pickup in the US Treasury bond yields and turns out to be a key factor acting as a heading for the GBP/USD pair. However, expectations that the Federal Reserve (Fed) will cut interest rates twice this year keep a lid on any meaningful gains for the Greenback. Furthermore, reduced bets that the BoE will ease monetary policy in the coming months in the wake of higher-than-expected services sector inflation in May should underpin the British Pound (GBP) and lend support to the currency pair. 

From a technical perspective, the GBP/USD pair is holding comfortably above the 100-day and 200-day Simple Moving Averages (SMA), which favors bullish traders. That said, mixed oscillators on the daily chart and the recent repeated failures to find acceptance above the 1.2800 round-figure mark warrant some before positioning for any meaningful upside ahead of the UK national election on July 4. Nevertheless, any further decline is likely to find decent support near the 1.2755-1.2750 horizontal zone, below which spot prices could accelerate the downfall further towards the 1.2715-1.2710 region. 

Some follow-through selling below the 1.2690-1.2685 region will suggest that the recent strong rally from the YTD low touched in April has run its course and expose the 100-day SMA support, currently pegged near the 1.2640-1.2635 area. The GBP/USD pair could eventually weaken further below the 1.2600 mark and aim to challenge the very important 200-day SMA, around the 1.2560-1.2555 zone. 

On the flip side, bulls need to wait for sustained strength above the 1.2800 mark before positioning for a move back towards challenging over a three-month high, around the 1.2860 area touched last Wednesday. The subsequent move up should allow the GBP/USD pair to surpass the YTD peak, around the 1.2900 neighborhood, and climb further towards the 1.2950 hurdle before aiming to reclaim the 1.3000 psychological mark for the first time since July 2023.

GBP/USD daily chart