GBP/USD flirts with one-month lows, 1.3600 remains in sight ahead of FOMC
- GBP/USD came under renewed selling pressure on Wednesday despite a subdued USD demand.
- Investors now await the FOMC decision for some impetus ahead of the BoE meeting on Thursday.
The GBP/USD pair remained depressed heading into the North American session and dropped to fresh one-month lows, around the 1.3625 region in the last hour.
Following an early uptick to the 1.3675-80 region, the GBP/USD pair met with some fresh supply on Wednesday and so far, has failed to benefit from a subdued US dollar price action. The risk-on impulse – as depicted by a fresh leg up in the equity markets – acted as a headwind for the safe-haven greenback.
China's struggling property giant Evergrande Group said it would pay the bond interest due on Thursday and the Chinese central bank injected cash into the banking system. The developments eased fears of an immediate corporate collapse and boosted the global risk sentiment, which, in turn, undermined safe-haven assets.
However, expectations for an imminent Fed taper announcement helped limit losses for the greenback. Conversely, the British pound was weighed down by some cross-driven weakness stemming from an uptick in the EUR/GBP cross. Apart from this, some repositioning trade ahead of the key event risk exerted pressure on the GBP/USD pair.
The market focus remains glued to the outcome of a two-day FOMC monetary policy meeting. The Fed will announce its decision later during the US session and investors will look for fresh clues about the likely timing of the tapering move. This will influence the USD price dynamics and provide some impetus to the GBP/USD pair.
Apart from this, the Bank of England meeting on Thursday will be looked upon to determine the next leg of a directional move. Nevertheless, the GBP/USD pair has now moved within the striking distance of the 1.3600 mark. This is closely followed by YTD lows, around the 1.3570 region, which should act as a key pivotal point for traders.
Technical levels to watch