GBP/USD trades near 1.2520 after retreating from the 11-week high

GBP/USD breaks a three-day winning streak after dropping from the 11-week high at 1.2559 due to the rise in the US dollar (USD). The GBP/USD pair trades lower around 1.2520 on Wednesday during the European session.

The hawkish comments made by Bank of England (BoE) officials on Tuesday helped the Pound Sterling (GBP) and provided a tailwind for the GBP/USD pair. Moreover, Andrew Bailey, the governor of the Bank of England (BoE), cautioned investors during a Treasury Select Committee hearing on Tuesday that they are undervaluing the longevity of UK inflation and are placing too much emphasis on the most recent data.

Governor Bailey also downplayed rumors that the BoE will begin policy easing by June 2024 and emphasized that the central bank would maintain high-interest rates for an extended period of time.

Ahead of the UK's autumn budget announcement, Prime Minister of the United Kingdom (UK), Rishi Sunak, declared that the government intends to lower taxes in response to a drop in inflation. It is expected that Jeremy Hunt, the Chancellor of the Exchequer, would announce policies intended to accelerate economic growth, with proposals to increase business investment being one of the main objectives.

The Federal Open Market Committee (FOMC) meeting minutes on Tuesday revealed a modestly hawkish tone, providing upward support for the US Dollar (USD). Committee members discussed the possibility of further tightening of monetary policy if fresh data fails to align with the Federal Reserve's (Fed) inflation goal. The Board decided to maintain a tight policy until there is clear and sustained progress toward the Committee's inflation objective.

Investors are likely to anticipate key data releases from the United States (US) on Wednesday, including weekly jobless claims and the Michigan Consumer Sentiment survey. Additionally, the preliminary S&P Global/CIPS Purchasing Managers Index (PMI) from the United Kingdom (UK) is scheduled for publication on Thursday.