British Pound stays weak below 1.3250 as USD bulls retain control ahead of FOMC Minutes

The British Pound (GBP) continued to weaken against the US Dollar (USD) during the first half of the European session on Wednesday, slipping below the 1.3250 mark. This decline marked a significant portion of the previous day's gains, occurring in a relatively narrow range that has persisted for the past two weeks. Market participants have been eagerly anticipating the release of the Federal Open Market Committee (FOMC) Minutes before placing new directional bets.

Recent US macro data indicated a slowdown in inflation and a slight easing in the job market, which has eased some pressure on the Federal Reserve to raise interest rates. Despite the possibility of an 85% chance that the Fed will raise borrowing costs by the end of the year, traders are closely watching the FOMC Minutes for additional insights into the central bank's policy stance.

Geopolitical tensions, particularly in the Middle East, continue to provide a tailwind for the US Dollar. Recent events, such as Saudi-backed Yemen's forces taking control of strategic points in the Red Sea, along with Iran-backed Houthis attacking targets in Saudi Arabia, have added to the volatility. Elevated crude oil prices, a result of increased attacks in the Strait of Hormuz, have also contributed to the USD's strength.

Meanwhile, US Treasury yields remain near multi-year highs, further bolstering the Dollar. The Pound may find some support from expectations of tighter monetary policy from the Bank of England (BoE), but traders should exercise caution before taking fresh bearish positions on the GBP/USD pair.