GBP/USD Price Analysis: Consolidates below 1.2700; 50/100-day SMAs confluence holds the key

• GBP/USD remains confined in a narrow range for the second straight day on Wednesday.
• The mixed fundamental backdrop holds back traders from placing fresh directional bets.
• A break below the 1.2645-1.2640 confluence support will pave the way for deeper losses. 

The GBP/USD pair extends its sideways consolidative price move for the second straight day and remains confined in a narrow range below the 1.2700 mark during the Asian session on Wednesday. The lack of any meaningful buying, meanwhile, warrants some caution before positioning for an extension of the recent bounce from the 1.2625-1.2620 region, or the lowest level since mid-May touched last Friday.

Against the backdrop of the Federal Reserve's (Fed) hawkish surprise earlier this month, policymakers have backed the case for keeping interest rates higher for longer. The markets, however, are still pricing in a greater chance that the US central bank will start cutting interest rates in September, which keeps the US Dollar (USD) bulls on the defensive and acts as a tailwind for the GBP/USD pair. That said, the Bank of England's (BoE) dovish pause last week caps the upside for the British Pound (GBP) and the currency pair ahead of the UK general election on July 4.

From a technical perspective, the recent pullback from the 1.2860 area, or a three-month peak touched on June 12 stalled near the 50-day Simple Moving Average (SMA). The said support is currently pegged near the 1.2645-1.2640 region, which now coincides with the 100-day SMA and should act as a key pivotal point. A convincing break below will be seen as a fresh trigger for bearish traders and drag the GBP/USD pair further below the 1.2600 round figure, towards testing the next relevant support near the 1.2560-1.2555 zone en route to the 1.2500 psychological mark.

On the flip side, the 1.2700 round figure is likely to act as an immediate hurdle ahead of the 1.2720-1.2725 supply zone. Some follow-through buying and a sustained strength beyond will suggest that the recent corrective decline has run its course. Given that oscillators have been recovering on the daily chart, the GBP/USD pair might then accelerate the move towards reclaiming the 1.2800 mark. Bulls might eventually aim to challenge the multi-month top, around the 1.2860 region, and lift spot prices further towards the 1.2900 round figure.

GBP/USD daily chart