• GBP/USD attracts some dip-buying on Wednesday, albeit lacks any follow-through.
• Bets for additional BoE rate hikes underpin the GBP and lend support to the major.
• Hawkish Fed expectations, looming recession risks benefit the USD and cap the pair.
• Traders also seem reluctant and prefer to wait for the release of the FOMC minutes.

The GBP/USD pair trims a part of intraday losses and climbs back closer to the 1.2100 mark during the early North American session on Wednesday. Spot prices, however, remain below a multi-day peak, around the 1.2145-1.2150 region touched the previous day, as traders keenly await the FOMC minutes before placing fresh bets.

Ahead of the key risk, some repositioning trade prompts some US Dollar selling and lends support to the GBP/USD pair. Apart from this, expectations for additional interest rate hikes by the Bank of England (BoE) act as a tailwind for the British Pound. The speculations were fueled by UK PMIs released on Tuesday, which indicated that business activity rose more than expected in February. This, in turn, lifted optimism that the YJ may be able to avoid a steep economic downturn.

The downside for the USD, meanwhile, is likely to remain limited amid growing acceptance that the Fed will stick to its hawkish stance for longer in the wake of stubbornly higher inflation. In fact, the US CPI and PPI data released last week showed that inflation isn't coming down quite as fast as hoped. Adding to this, several FOMC policymakers, including Fed Chair Jerome Powell, recently stressed the need to keep lifting rates gradually to fully gain control of inflation.

Hence, the FOMC minutes will be closely scrutinized for fresh clues about the Fed's future rate-hike path. This will play a key role in influencing the near-term USD price dynamics and help determine the next leg of a directional move for the GBP/USD pair. In the meantime, looming recession risks, along with geopolitical tensions, should benefit the Greenback's relative safe-haven status and contribute to capping any meaningful upside for the major, at least for the time being.

Technical levels to watch