GBP/USD off lows, still in the red below 1.2500 handle ahead of FOMC
- Softer UK consumer inflation figures exerted some intraday pressure on the Sterling.
- Reluctance to place aggressive bets ahead of FOMC helped limit the downside.
The GBP/USD pair held on to its weaker tone through the early North-American session on Wednesday, albeit has managed to recover few pips from daily lows.
With investors looking past the latest Brexit optimism, the pair continued with its struggle to find acceptance above the key 1.2500 psychological mark and retreated from multi-week tops amid a modest pickup in the US Dollar demand. The intraday slide accelerated further following the release of softer-than-expected UK consumer inflation figures, though lacked any strong follow-through selling.
Downside remains limited ahead of FOMC
A sharp intraday fall in the US Treasury bond yields kept a lid on any runaway rally for the greenback and helped limit any deeper losses for the major. Moreover, investors also seemed reluctant to place any aggressive bets, rather preferred to wait on the sidelines ahead of the highly anticipated FOMC monetary policy decision, scheduled to be announced later during the US trading session.
The Fed is widely expected to cut interest rates by another 25 bps, though opinions over further/aggressive easing remained divided. Hence, investors will closely scrutinize the accompanying monetary policy statement and updated economic projections. This coupled with the Fed Chair Jerome Powell's comments during the post-meeting press conference should produce some meaningful trading opportunities.
Technical levels to watch