BoE in a Bind
The Bank of England (BoE) has been on a very aggressive monetary tightening path, having delivered its fourth straight rate increase in its last meeting in early June and had hinted to potentially more tightening.
The statement wrote that "some degree of further tightening in monetary policy may still be appropriate in the coming months", which is rather "soft" wording. The central bank has been driven by surging inflation which it projects to hit around 10% by the end of the year, but also sees the economy contracting in the same period. 
These diverging forces, from a monetary standpoint, place the BoE in difficult spot and leave it with less space and time for more upward adjustments in rates.
Fed Hawkish Commentary
The Federal Reserve is behind the BoE with two rate increases, but is on an aggressive and front-loaded path to policy normalization, also driven by high inflation. Mr Powell had said that half-percentage point hikes "would be on the table at the next two meetings" in his May press conference, but had shut the door to larger 75 basis points moves, which was largely viewed as conservative approach. 
Recent economic data could support a more timid stance, since inflation has shown moderation, while GDP contracted in the first quarter, according to preliminary figures.
Since then, Chair Powell has tried to reassert the Fed's hawkishness and commitment to fighting inflation, while we have not heard anything concrete regarding the bank's intentions past the July meeting.
This changed yesterday, as governor Waller (voter) said on Wednesday that he supports 50 basis points moves for "several meetings", which we can only presume means more than two meetings. 
As the Fed's hawkishness became less pronounced after the rate hike in early May and inflation eased, the US Dollar deflated and the pair found the chance to register a solid two-week recovery, now trying to post its first profitable month of the year.
GBP/USD is at critical point from technical prospective, since it has managed to close above the EMA200 over the last couple of days. This has brought the 38.2% Fibonacci of the 2022 High/Low drop (1.2763) in the spotlight, but does not inspire confidence for a larger advance past this area and towards 1.3000.
Despite the recovery, the monetary policy differential still seems to be in favor of the US Dollar and GBP/USD struggles to move away from the EMA200. Below the 38.2% Fibonacci, the recent price action is viewed as a limited correction. The pair is vulnerable to renewed pressure towards 1.2530, but it may be early to talk about a return to 1.2410.
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
Retrieved 31 May 2022 https://www.bankofengland.co.uk/monetary-policy-report/2022/may-2022
Retrieved 31 May 2022 https://www.federalreserve.gov/monetarypolicy/fomcpresconf20220504.htm
Retrieved 01 Jul 2022 https://www.federalreserve.gov/newsevents/speech/waller20220530a.htm