• GBP/USD lacks any firm intraday direction and remains confined in a range on Wednesday. 
• Fed rate cut bets keep the USD bulls on the defensive, which acts as a tailwind for the major.
• Expectations for less aggressive BoE rate cuts further lend support ahead of Trump’s tariffs.

The GBP/USD pair struggles to capitalize on the overnight bounce from the vicinity of the 1.2870 support zone, or a multi-week low touched last Thursday, and oscillates in a narrow band during the Asian session on Wednesday. Spot prices currently trade around the 1.2915-1.2920 region, nearly unchanged for the day, as traders keenly await US President Donald Trump’s reciprocal tariffs announcement before placing fresh directional bets. 

In the meantime, investors opt to wait on the sidelines amid the risk of a widening global trade war, especially after Trump dashed hopes that the levies would be limited to a smaller group of countries with the biggest trade imbalances. The UK expects to be hit by new US tariffs, indicating that a deal to exempt British goods will not be reached in time. This, in turn, is seen acting as a headwind for the British Pound (GBP) and the GBP/USD pair. 

The downside, however, seems cushioned amid subdued US Dollar (USD) price action, led by expectations that a tariff-driven slowdown in the US economic activity would force the Federal Reserve (Fed) to resume its rate-cutting cycle soon. In fact, the markets are pricing in a greater chance of a rate cut in June and the bets were lifted by US ISM PMI on Tuesday, which indicated that the manufacturing sector contracted for the first time in three months. 

Apart from this, a stable performance around the equity markets is seen undermining the safe-haven Greenback, The British Pound (GBP), on the other hand, could draw support from expectations that the Bank of England (BoE) will lower borrowing costs more slowly than other central banks, including the Fed. This might further contribute to limiting the downside for the GBP/USD pair and warrants caution for aggressive bearish traders.

Moving ahead, there isn’t any relevant market-moving economic data due for release from the UK. The US economic docket, however, features the ADP report on private-sector employment and Factory Orders data. This, along with the broader risk sentiment, could influence the USD and provide some impetus to the GBP/USD pair later during the North American session. The focus, however, remains glued to Trump’s tariffs announcement. 

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