GBP/USD remains below 1.3300 as risk aversion grows due to rising geopolitical tensions

• GBP/USD faces challenges due to rising risk-aversion sentiment amid escalating Middle-East conflict.
• Iran launched over 200 ballistic missiles at Israel and warned that any counterstrike would lead to "vast destruction."
• BoE’s Greene indicated that additional interest rate cuts are likely since prices are "moving in the right direction."

GBP/USD remains tepid following the losses registered in the previous session, trading around 1.3280 during the Asian hours on Wednesday. This downside could be attributed to the risk aversion due to the rising geopolitical tensions in the Middle East, which undermines the risk-sensitive Pound Sterling (GBP) and GBP/USD pair.

Iran launched over 200 ballistic missiles at Israel on Tuesday, shortly after the US had warned that a strike was imminent. The Israel Defense Forces reported that several of the missiles were intercepted, while reports indicated that one person was killed in the West Bank, according to Bloomberg.

Israeli Prime Minister Benjamin Netanyahu vowed to retaliate against Iran following a missile attack on Tuesday. In response, Tehran warned that any counterstrike would lead to "vast destruction," raising concerns about the potential for a broader conflict.

The US Dollar (USD) receives support from the latest speech by the Federal Reserve (Fed) Chairman Jerome Powell. Powell said that the central bank will lower its interest rate gradually over time. Fed Chair Powell added that the recent half-point interest rate cut should not be seen as an indication of similarly aggressive future actions, noting that upcoming rate changes are likely to be more modest.

On Tuesday, Bank of England (BoE) policymaker Megan Greene warned that a consumption-driven recovery in the United Kingdom (UK) could trigger a new wave of inflation. However, Greene noted that further interest rate cuts are likely as prices are "moving in the right direction," according to Bloomberg.

BoE policymaker Greene also stated that she believed the neutral interest rate had increased since the inflation shock. While most estimates suggest that the neutral rate for the Bank of England is around 3.5%, Greene did not provide a specific figure. The neutral rate refers to the level at which a central bank's policy neither stimulates nor constrains economic growth.

Traders are expected to pay close attention to the upcoming US ADP Employment Change report and comments from Federal Reserve officials on Wednesday for additional guidance on Wednesday. On the UK’s dock, the Bank of England’s Monetary Policy Report Hearings will be closely monitored on Thursday.