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GBP/USD sticks to gains above 1.2500 amid weaker USD, traders keenly await FOMC decision

GBP/USD sticks to gains above 1.2500 amid weaker USD, traders keenly await FOMC decision

  • GBP/USD catches fresh bids on Wednesday and snaps a two-day losing streak to a multi-day low.
  • A combination of factors weighs heavily on the USD and remains supportive of the positive move.
  • The upside seems limited as traders now look to the US macro data ahead of the FOMC decision.

The GBP/USD pair regains positive traction on Wednesday and snaps a two-day losing streak to a nearly one-week low, around the 1.2435 region touched the previous day. The pair maintains its bid tone through the first half of the European session and is currently placed near the top end of its daily range, just above the 1.2500 psychological mark.

The US Dollar (USD) drifts lower for the second successive day and retreats further from a three-week high touched on Tuesday, which, in turn, is seen as a key factor pushing the GBP/USD pair higher. The overnight release of the US Job Openings and Labor Turnover Survey (JOLTS) indicated that the ultra-tight US job market is loosening. Apart from this, concerns over the US debt ceiling, along with renewed fears of a full-blown banking crisis, drag the US Treasury bond yields lower and continue to weigh on the Greenback.

Apart from this, a modest recovery in the US equity futures undermines the safe-haven buck and lends additional support to the GBP/USD pair, though the upside seems limited ahead of the highly-anticipated FOMC monetary policy decision. The Federal Reserve (Fed) is widely expected to hike rates by 25 bps and could soften its hawkish stance amid slowing economic growth. Investors, however, remain divided over the possibility that the Fed will announce a pause in its rate-hiking cycle as inflation is still trending well above the target.

Hence, the accompanying monetary policy statement and Fed Chair Jerome Powell's comments at the post-meeting presser will be scrutinized closely for clues about the future rate-hike path. This, in turn, will play a key role in influencing the near-term USD price dynamics and provide a fresh directional impetus to the GBP/USD pair. Heading into the key central bank event risk, traders on Wednesday might take cues from the US economic docket - featuring the release of the ADP report on private-sector employment and the ISM Services PMI.

Technical levels to watch

GBP/USD

Overview
Today last price 1.251
Today Daily Change 0.0043
Today Daily Change % 0.34
Today daily open 1.2467
 
Trends
Daily SMA20 1.2453
Daily SMA50 1.2267
Daily SMA100 1.2215
Daily SMA200 1.1944
 
Levels
Previous Daily High 1.2512
Previous Daily Low 1.2436
Previous Weekly High 1.2584
Previous Weekly Low 1.2387
Previous Monthly High 1.2584
Previous Monthly Low 1.2275
Daily Fibonacci 38.2% 1.2465
Daily Fibonacci 61.8% 1.2483
Daily Pivot Point S1 1.2431
Daily Pivot Point S2 1.2395
Daily Pivot Point S3 1.2355
Daily Pivot Point R1 1.2508
Daily Pivot Point R2 1.2548
Daily Pivot Point R3 1.2584

 

 

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