GBP/USD Slips Below Key Support Level Amidst US Inflation Expect

The GBP/USD currency pair encountered obstacles near 1.2300 following a failed recovery attempt. Meanwhile, S&P500 futures are maintaining their losses from the Asian session, indicating a cautious market sentiment. The USD Index has surged above 103.00, hitting a weekly high due to positive oil prices that have raised expectations for higher US inflation.

During the Asian session, the GBP/USD pair tumbled below the significant round-level support of 1.2300. The Cable experienced a volatile period as investors moved their capital into the US Dollar Index (DXY), anticipating that the Federal Reserve (Fed) would raise interest rates to combat inflation aggressively.

The USD Index has hit a weekly high above 103.00 due to the optimistic oil prices, which have boosted expectations for inflation in the United States. The rise in oil prices is expected to fuel inflationary pressures as producers will offset the impact of expensive oil by raising prices of their goods and services.

S&P500 futures are still in the red following the Asian session, portraying a wary market mood. The GBP/USD pair is anticipated to witness high volatility before the US ISM Manufacturing PMI data release. This economic data is indicative of future demand for goods and is expected to drop significantly to 44.6, compared to the prior release of 47.00. The subdued consensus for the US Manufacturing PMI could result from the Fed's decision to raise interest rates to control inflation.

The GBP/USD currency pair began to decline after the presence of responsive sellers around the high of March 31 at 1.2424. The Higher High Higher Low structure in the GBP/USD pair has been broken after slipping below the low of March 30 around 1.2300. The Cable is expected to attract more downside bets in the future.