Cable Slips Below Key Levels as Fed Tightening Expectations InteGBP/USDOANDA:GBPUSDAurex-finance-excosystemThe British Pound weakened against the US Dollar during Wednesday’s European session, with GBP/USD slipping roughly 0.25% to trade near the psychologically important 1.3500 level as investors increased bets that the Federal Reserve could tighten monetary policy again later this year. The latest decline in Cable reflects renewed demand for the Greenback following stronger-than-expected US inflation data, which has significantly altered market expectations surrounding the Federal Reserve’s policy trajectory. At the time of writing, the US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, advanced toward 98.50 as Treasury yields climbed and traders reassessed the likelihood of prolonged restrictive monetary policy in the United States. In my view, the inflation surprise has once again reminded markets that the Federal Reserve remains far from declaring victory over price pressures, particularly as core inflation components continue to show resilience despite elevated borrowing costs. Tuesday’s US Consumer Price Index report reinforced that narrative. Headline inflation accelerated to 3.8% year-over-year in April, exceeding both the 3.7% market forecast and the previous 3.3% reading. The hotter-than-expected print immediately triggered a repricing across interest-rate markets, with investors sharply scaling back expectations for policy easing while reviving speculation that another rate increase may still be possible before year-end. According to CME FedWatch data, the probability of at least one additional Federal Reserve rate hike this year climbed to 35.6%, up significantly from 23.5% before the inflation release. That shift in expectations has fueled a broad-based recovery in the US Dollar while simultaneously weighing on risk-sensitive and lower-yielding currencies, including Sterling. The Pound’s downside move has also been amplified by investor caution ahead of the United Kingdom’s first-quarter Gross Domestic Product figures, scheduled for release on Thursday. Economists expect the UK economy to expand by 0.6% during the quarter, marking a sharp improvement from the modest 0.1% growth recorded in the final quarter of 2025. While stronger GDP data could provide temporary support for Sterling, markets remain cautious about the broader outlook for the British economy amid persistent inflation concerns and uneven consumer demand. From a broader perspective, the divergence between Federal Reserve and Bank of England expectations continues to shape GBP/USD direction. While the Fed is now being forced into a more hawkish stance by sticky inflation, the Bank of England remains caught between slowing growth and lingering price pressures, limiting its flexibility and leaving Sterling vulnerable to renewed Dollar strength. Technical Analysis From a technical perspective, GBP/USD is beginning to lose bullish momentum after failing to sustain gains near the upper boundary of a broader ascending channel visible on the 4-hour chart. Price action has rolled over from the 1.3650 region and is now testing the lower boundary of the rising trend structure around the 1.3500 psychological level, an area that has emerged as critical near-term support. The pair remains trapped within a broader upward-sloping channel that has guided price action since early April, but recent candles suggest bearish pressure is building as sellers continue defending rallies near the channel top. The latest rejection from the 1.3640–1.3650 zone has formed a lower high relative to the previous swing peak, signaling fading upside momentum and increasing risks of a deeper corrective move. Technically, the 1.3500 region now represents a pivotal inflection point. A decisive breakdown below this support area and beneath the ascending trendline would likely confirm a bearish channel breakdown, exposing the next downside target near 1.3450 initially. Sustained weakness below that level could accelerate losses toward the 1.3350 region, where previous consolidation and structural demand emerged earlier in the trend. The chart structure also hints at the formation of a short-term bearish continuation setup, with sellers gradually regaining control after repeated failures to push toward fresh highs. If bearish momentum intensifies, the broader bullish structure that has dominated since April may begin transitioning into a wider corrective phase. On the upside, buyers would need to reclaim the 1.3550 region to stabilize sentiment in the near term. However, the key resistance remains clustered around 1.3600–1.3650, where repeated rejections have capped upside attempts throughout May. A sustained breakout above that ceiling would invalidate the immediate bearish outlook and shift focus back toward the 1.3700 psychological barrier. Momentum indicators are also beginning to soften. The Relative Strength Index (RSI) appears to be drifting lower from previously elevated levels, suggesting bullish momentum is cooling without yet reaching oversold territory. This indicates room for further downside before buyers potentially re-enter the market. Meanwhile, the Moving Average Convergence Divergence (MACD) is likely crossing lower and flattening near the signal line, reinforcing expectations for continued corrective weakness in the short term. Overall, while the broader trend remains constructive above the long-term rising trendline, near-term risks have tilted bearish as GBP/USD struggles to maintain momentum within its ascending channel. TRADE RECOMMENDATION SELL GBP/USD ENTRY PRICE: 1.3500 STOP LOSS: 1.3575 TAKE PROFIT: 1.3350