GBP/USD refreshes daily high amid post-ADP USD downtick, focus remains on FOMC

GBP/USD staged a goodish intraday bounce from the weekly low touched earlier this Wednesday.
A positive risk tone and dismal ADP report weighed on the safe-haven USD and extended support.
The upside potential seems limited as the focus remains glued to the crucial FOMC policy decision.

Haresh Menghani FXStreet

The GBP/USD pair rose to a fresh daily high around the 1.2535 region, during the early North American session on Wednesday after a dismal US ADP report weakened the US dollar.

The report by Automatic Data Processing (ADP) showed that US private-sector employers added 247K new jobs in April. This missed consensus estimate pointing to the 395K increase, though was largely offset by an upward revision of the previous month's reading to 479K from the 455K reported earlier.

The pair has now rallied nearly 70 pips from the weekly low of 1.2465, touched earlier this Wednesday amid modest US dollar weakness. Given that the Fed's anticipated move to hike interest rates is already priced in, indications of a positive opening in the US equity markets undermined the safe-haven greenback.

Apart from this, the prospects for a more aggressive policy tightening should act as a tailwind for the buck and keep a lid on any further gains for the GBP/USD pair. Investors seem convinced that the Fed will tighten its monetary policy at a faster pace to curb soaring inflation. Hence, the focus will remain on the outcome of a two-day FOMC meeting.

The Fed is widely expected to hike benchmark interest rates by 50 bps and lay plans to start shrinking its massive, a near $9 trillion balance sheet. Investors, however, will scrutinize Fed Chair Jerome Powell's comments to see if the US central bank is ready to continue with its policy tightening and hike interest rates further even if the economy weakens.

This will play a key role in influencing near-term USD price dynamics and provide some meaningful impetus to the GBP/USD pair ahead of the Bank of England policy meeting on Thursday. The combination of key central bank event risks warrants some caution for aggressive traders when considering how to position for a firm near-term direction.

Technical levels to watch

GBP/USD

Overview
Today last price	1.253
Today Daily Change	0.0031
Today Daily Change %	0.25
Today daily open	1.2499

Trends
Daily SMA20	1.2864
Daily SMA50	1.3063
Daily SMA100	1.3287
Daily SMA200	1.3459

Levels
Previous Daily High	1.2567
Previous Daily Low	1.247
Previous Weekly High	1.2842
Previous Weekly Low	1.2411
Previous Monthly High	1.3167
Previous Monthly Low	1.2411
Daily Fibonacci 38.2%	1.253
Daily Fibonacci 61.8%	1.2507
Daily Pivot Point S1	1.2458
Daily Pivot Point S2	1.2416
Daily Pivot Point S3	1.2361
Daily Pivot Point R1	1.2554
Daily Pivot Point R2	1.2609
Daily Pivot Point R3	1.2651

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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