GBP/USD Attempts Recovery; Fed Inflation Concerns Loom Large

The GBP/USD pair faces selling pressure in its attempt to extend recovery above 1.26860 against the US Dollar (USD) during Tuesday’s London session. The pair edges down as the US Dollar rebounds following a modest correction from a six-week high.

Fed policymakers want to see a sustained decline in inflation for several months before gaining confidence in lowering interest rates. They remain concerned about the potential reacceleration of price pressures due to premature rate cuts, even though progress in the disinflation process has resumed after stalling in the first quarter of the year.

Meanwhile, we observe GBP entering recovery territory with a potential bullish initiative from the 1.2660 level of yesterday. The stochastic indicator is in oversold condition, right in an area of support. We are looking for a long setup today following the release of the US Core Retail Sales m/m data.

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