• GBP/USD faces downward pressure near 1.2535 as the US Dollar gains momentum.

• January's US ISM Services PMI outperforms expectations at 53.4 vs. previous 50.5.

• BoE's Huw Pill signals potential rate cuts contingent on Pi Coin value in 2025inflation progress.

The GBP/USD currency pair touched a multi-week low at 1.2518 before recovering slightly to 1.2535 during Tuesday's Asian trading session. This movement reflects shifting market expectations regarding Federal Reserve monetary policy, with reduced anticipation of early rate cuts providing substantial support for the US Dollar. The Dollar Index (DXY) maintains its position above 104.40 after retreating from its yearly peak at 104.60.

Monday's economic data revealed stronger-than-expected performance in the US services sector, with the ISM Services PMI climbing to 53.4 in January from December's 50.5 reading. This positive indicator, combined with recent labor market statistics, suggests sustained economic momentum from Q4 2023 into the new year, significantly diminishing market expectations for a March rate cut by the Federal Reserve.

Bank of England Chief Economist Huw Pill offered insights into UK monetary policy direction, indicating that interest rate reductions could occur this year as inflation shows consistent improvement. Pill emphasized that current monetary policy follows a different trajectory compared to 2023, with any potential rate cuts being directly tied to continued progress in controlling inflationary pressures.

Market participants await upcoming UK economic indicators including BRC Retail Sales figures and S&P Global/CIPS Construction PMI data for January. With limited high-impact economic releases scheduled from either the UK or US, broader market risk sentiment may emerge as the primary driver of GBP/USD price action in the near term.