Market rally halted ahead of the scheduled speeches of Bank of England Governor Andrew Bailey and Fed Chairman Jerome Powell. Clearly, traders do not want to make aggressive bets, preferring to remain on the sidelines.

Bailey's remarks may be seen as a confirmation of rate cuts in 2024, given the high risks of the UK economy entering a recession. In fact, on Monday, Bank of England Chief Economist Huw Pill stated that before reducing interest rates from their current 15-year high, the central bank may wait until the middle of next year. Such statements may continue to exert pressure on pound.

On the side of dollar, traders await the comments of Powell regarding future interest rate hikes, which will play a key role in influencing short-term dynamics. The Fed already noted last week that financial conditions for inflation control became as tight as they can get, so market players interpreted this as a sign of the end of the rate hike cycle. A weaker US employment report also strengthened the belief that the Fed will no longer raise rates.

Although the most influential members of the FOMC maintained a hawkish tone and held hopes for additional rate hikes, leading to a slight recovery of dollar, the continued decline in US Treasury yields and the prevailing risk appetite did not allow dollar to consolidate its gains. This, in turn, provides some support for the GBP/USD pair.

The current situation may favor the bears and suggest that in the near future, the path of least resistance for spot prices remains downward. However, given the daily chart and the break of the downward trend, the pair may change direction in the future.