• GBP/USD bounces off earlier lows near 1.2360.
• UK inflation figures surprised to the upside in April.
• BoE Bailey said inflation expectations are retreating.

Following an earlier drop to new monthly lows near 1.2360, GBP/USD manages to regain some balance and retake the 1.2400 neighbourhood on the back of some loss of traction in the US dollar.

GBP/USD now looks at FOMC Minutes

GBP/USD now alternates gains with losses around the 1.2400 region as the European trading session draws to a close on Wednesday.

In the meantime, the British pound remains under scrutiny in the wake of higher than expected UK inflation figures tracked by the CPI in April. As a matter of fact, UK consumer prices rose more than estimated during last month, although they lost traction vs. the previous readings.

From the BoE, Governor A. Bailey argued that around a third of rate raises have hit the economy so far, at the time when he reiterated that the labour market remains tight and inflation expectations seem to be running out of steam. In addition, Bailey acknowledged that the main issue is how sticky and stubborn is the way down in inflation.

Still around the BoE, market consensus now appears to lean towards two extra rate hikes in the next months, while the probability of a rate cut in November now runs (very) thin.

Later in the NA session, investors will closely follow the release of the FOMC Minute.

GBP/USD levels to consider

As of writing, the pair is losing 0.04% at 1.2406 and faces the next support at 1.2364 (monthly low May 24) followed by 1.2344 (weekly low April 10) and finally 1.2274 (monthly low April 3). On the other hand, the surpass of 1.2668 (2023 high May 8) would open the door to 1.2864 (200-week SMA) and then 1.3000 (psychological level).