GBP/USD RETREATS FROM DAY’S HIGH AT 1.3070 AHEAD OF BOE’S BAILEY AND FED’S POWELL

• GBP/USD finds a minor pullback at 1.3074 amid uncertainty over the BOE’s Bailey and Fed’s Powell speeches.
• BOE’s Bailey may raise hopes of a fourth-rate hike by the BOE in May.
• The Fed may schedule a balance sheet reduction along with a mega rate hike.

The GBP/USD pair has attracted some offers after forming a high of 1.3074 in early Tokyo. The cable advanced firmly on Wednesday from its yearly lows at 1.2987. It seems that overbought oscillators on the small timeframe are demanding a pullback before a fresh upside.

It looks like investors are getting cautious over the appearances of the Bank of England (BOE) Governor Andrew Bailey and Federal Reserve (Fed) chair Jerome Powell on Thursday.  The pound bulls are bracing the cues for a fourth consecutive interest rate hike by the BOE in May. Inflation is on the rooftop in the sterling area backed by the higher energy bills and food prices, which is likely to put forward a hawkish stance from BOE policymakers.

Meanwhile, the US dollar index (DXY) has witnessed a modest bounce in the Asian session after the bears snapped a three-day winning streak on Wednesday. The DXY is likely to display some volatile moves ahead of the speech from the Fed’s Powell in the American session. The odds of a jumbo rate hike are getting stronger day by day and chances of balance sheet reduction are gaining the limelight after the comments from San Francisco Fed President and FOMC member Mary Daly on Wednesday.

Apart from the speeches of Fed’s Powell and BOE’s Bailey, investors will also focus on the release of the UK Retail Sales, which are due on Friday. The yearly UK Retail Sales are seen at 2.8% against the prior print of 7%.