• GBP/USD strengthens to around 1.3510 in Wednesday’s early European session. 
• The BoE interest rate is likely to continue on a gradual downward path. 
• Traders brace for the US Initial Jobless Claims report later on Wednesday. 

The GBP/USD pair trades in positive territory near 1.3510 during the early European session on Wednesday. The Pound Sterling (GBP) strengthens against the Greenback on expectations that the Bank of England (BoE) will follow a gradual monetary easing path in 2026.  

The UK central bank delivered a widely expected rate cut to 3.75% last week, but suggested that the bar for further reduction was high, given persistent inflation. Rising bets of a slower BoE monetary easing path could provide some support to the Cable against the US Dollar (USD) in the near term. Money markets believe the BoE will deliver at least one rate cut in the first half of the year, and pricing in nearly a 50% probability of a second before the year-end, according to Reuters.

On the other hand, the stronger-than-expected US economic data could underpin the USD and act as a headwind for the major pair. Data released by the Bureau of Economic Analysis on Tuesday revealed that the US Gross Domestic Product (GDP) grew at a 4.3% annualized pace in the third quarter (Q3). This reading came in above the market consensus of 3.3% and followed 3.8% growth in Q2.  

Financial markets are likely to remain quiet ahead of the Christmas holiday. Traders will take more cues from the US Initial Jobless Claims data later in the day. The market consensus was for 223,000 initial jobless claims for the week ending December 13, compared to 224,000 in the previous reading.  

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