The GBP/USD currency pair got back to around 1.2030 before London opens on Wednesday. The Cable pair bounces back for the third time from the psychologically important level of 1.2000 while testing Tuesday’s bearish bias.

When the Bank of England stopped tightening money after its meeting in December, the pair lost steam earlier this month. Two people on the committee were against the 50-basis-point rate hike.

The BoE’s decision means that tightening the economy will be easier in 2023 and that interest rates will peak at a lower level. Insiders think the Bank Rate will peak at 4% instead of 6% next year.

The forex markets stay flat the week after Christmas, and the stock markets go up a little bit. Because Chinese officials announced that they were lifting restrictions on travel into the country, that might start a quick economic recovery in the Asian region.

There won’t be any macroeconomic data from the UK. On the economic agenda for the US are the November Pending Home Sales and the December Manufacturing Index from the Federal Reserve Bank of Richmond.

After dropping 4.6% in October, the market thinks that Pending Home Sales will go up 0.6% each month. Due to slow trading before the New Year’s break, the market isn’t likely to react much to this US data, but a significant drop will likely remind investors of how bad the housing market is getting and hurt the US Dollar.

Conclusion

The GBP/USD pair could keep losing, but it might not get back above 1.2140.