• GBP/USD rebounds from a low, as subdued US employment figures influence Fed rate decision expectations.
• ADP employment growth slows and the Employment Cost Index falls short of projections, fueling speculations for a rate cut.
• Investors also focus on the Bank of England's upcoming decision and economic outlook, with Governor Bailey's remarks closely watched for policy clues.

The GBP/USD edges higher during the North American session on Wednesday after softer-than-expected economic data from the United States (US) could prompt the US Federal Reserve (Fed) to cut rates. However, market participants seem cautious ahead of the Fed’s decision around 19:00 GMT. The pair exchanges hands at 1.2728 after bouncing from a daily low of 1.2666.

GBP/USD post decent gains as soft US data sparks rate cut speculations

The US economic calendar featured two employment reports in early trading ahead of the FOMC. Private hiring rose less than expected, according to ADP data, with figures dipping from 158K to 107K, also below estimates. The Employment Cost Index for the last quarter of 2023 was 0.9% QoQ, below forecasts and Q3’s number, suggesting the risks of a wage-price spiral.

Aside from this, traders are awaiting the release of the Federal Reserve’s decision, with market participants estimating the US central bank would keep rates unchanged. Instead, they're looking for clues of the beginning of the easing cycle. This was after Fed Chair Jerome Powell and Co. embarked on a tightening cycle that witnessed more than 500 basis points of tightening to curb inflation that reached 9.1% YoY.

On the other side of the Atlantic, the Bank of England is expected to stay pat and release its latest economic projections That along with the BoE’s Governor Andrew Bailey press conference, would be scrutinized by market participants