The GBP/USD pair trades in positive territory for the second consecutive day around 1.2690 during the early European session on Wednesday. However, the potential upside for GBP/USD seems limited as the expectation of less aggressive interest rate cut by the US Federal Reserve (Fed) and the concerns about US President-elect Donald Trump's tariffs policies could provide some support to the Greenback. Investors await Federal Reserve Chair Jerome Powell's speech for cues about the interest rate outlook.
The bearish outlook of GBP/USD remains in play as the major pair holds below the key 100-day Exponential Moving Average (EMA) on the daily timeframe. Furthermore, the 14-day Relative Strength Index (RSI) remains capped below the midline around 45.35, suggesting that the further downside cannot be ruled out.
The 1.2600 psychological level acts as an initial support level for the major pair. Further south, the next downside target to watch is 1.2467, the lower limit of the Bollinger Band. A breach of this level could push prices lower toward 1.2331, the low of April 23.
In the bullish case, the first resistance level is seen at 1.2750, the high of November 29. Sustained bullish momentum could see a rally to 1.2875, the 100-day EMA. The additional upside filter emerges at 1.2920, the upper boundary of the Bollinger Band.
Source: FXSTREET
