• GBP/USD comes under renewed selling pressure and slides back closer to over a two-week low.
• The Fed’s hawkish outlook, rising US bond yields revive the USD demand and weigh on the pair.
• The risk-on impulse caps gains for the safe-haven buck and limits any further slide for the major.

The GBP/USD pair meets with a fresh supply on Wednesday and slides back below the 1.2100 round-figure mark during the mid-European session. The pair is currently placed just a few pips above a two-and-half-week low touched on Tuesday, with bears still awaiting a sustained break below the very important 200-day SMA.

The US Dollar regains positive traction and recovers a part of the previous day's heavy losses, which, in turn, is seen as a key factor exerting downward pressure on the GBP/USD pair. As investors digest the Bank of Japan's surprise policy shift, the Fed's hawkish outlook last week assists the greenback to attract fresh buying. It is worth recalling that the US central bank indicated that it will continue to raise interest rates to crush inflation and projected an additional 75 bps lift-off by the end of 2023.

The British Pound, on the other hand, continues to be undermined by a dovish outcome from the Bank of England (BoE) meeting, where two MPC members voted to keep rates unchanged. This, along with growing recession fears, further contributes to the offered tone surrounding the GBP/USD pair. That said, the risk-on impulse - as depicted by a goodish move up in the US equity markets - might hold back traders from placing aggressive bullish bets around the safe-haven buck. This, in turn, could help limit losses for the major.

Hence, it will be prudent to wait for some follow-through selling and acceptance below a technically significant 200-day SMA before placing aggressive bearish bets around the GBP/USD pair. Nevertheless, the fundamental backdrop suggests that the path of least resistance for spot prices is to the downside and supports prospects for a further near-term depreciating move. Traders now look forward to the release of the Conference Board's US Consumer Confidence Index for a fresh impetus during the early North American session.

Technical levels to watch