- 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
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stabilizes near 1.0400, volumes remain light on New Year's Eve
EUR/USD stabilizes at around 1.0400 on Tuesday following Monday's choppy action. The cautious market stance helps the US Dollar stay resilient against its rivals and doesn't allow the pair to gain traction as trading conditions remain thin heading into the end of the year.
GBP/USD retreats below 1.2550 after short-lasting recovery attempt
GBP/USD loses its traction and retreats below 1.2550 after climbing above 1.2600 on Monday. Although falling US Treasury bond yields weighed on the USD at the beginning of the week, the risk-averse market atmosphere supported the currency, capping the pair's upside.
Gold rebounds after finding support near $2,600
After posting losses for two consecutive days, Gold found support near $2,600 and staged a rebound early Tuesday. As investors refrain from taking large positions ahead of the New Year Day holiday, XAU/USD clings to daily gains at around $2,620.
These three narratives could fuel crypto in 2025, experts say
Crypto market experienced higher adoption and inflow of institutional capital in 2024. Experts predict the trends to look forward to in 2025, as the market matures and the Bitcoin bull run continues.
Three Fundamentals: Year-end flows, Jobless Claims and ISM Manufacturing PMI stand out Premium
Money managers may adjust their portfolios ahead of the year-end. Weekly US Jobless Claims serve as the first meaningful release in 2025. The ISM Manufacturing PMI provides an initial indication ahead of Nonfarm Payrolls.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.