GBP/USD pared further gains on Wednesday, slumping for the second straight session and dropping back below 1.3500 after failing to reclaim 1.3600 earlier this week. The pound market retreated from the peak of a bull run that took cable to multi-year highs, but momentum still favors the pound bulls.

The Federal Reserve's (Fed) latest minutes from the Federal Open Market Committee (FOMC) interest rate meeting on May 6-7 revealed that the Fed's wait-and-see approach has deep roots. Policymakers at the latest Fed meeting noted that the US dollar's ​​(USD) safe-haven status had taken a hit recently. They warned that a "more durable shift" in the greenback's status could have lasting impacts on the US economy.

Most all FOMC members at the May rate meeting agreed that inflation risks could prove more "persistent than expected." With Fed staff directly citing the impact of tariffs as the main driver of the FOMC's weakening outlook for the US economy, the FOMC has blamed the deteriorating US economic conditions and the unclear outlook for inflation and growth on the Trump administration's erratic tariff policies.

The rest of the trading week remains dominated by the US. US Q1 Gross Domestic Product (GDP) growth is due on Thursday. Friday will close out the trading week with the US Personal Consumption Expenditures (PCE) Price Index inflation data for April. Markets are hoping for continued easing in the key inflation metric before the impact of the Trump administration's tariff policies starts to leak into the main data set. (alg)

Source: FXstreet