GBP/USD eases from multi-month tops, still well bid near mid-1.2700s
- GBP/USD continued scaling higher on Wednesday and shot to fresh three-month tops.
- The prevalent USD selling bias remained supportive of the pair’s ongoing positive move.
- Slightly overbought conditions prompted some profit-taking ahead of FOMC decision.
The GBP/USD pair trimmed a part of its intraday gains and has now retreated around 35-40 pips from fresh three-month tops set earlier this Wednesday.
The pair prolonged its recent bullish trajectory and continued gaining traction for the tenth straight session on Wednesday. The prevalent offered tone surrounding the US dollar was seen as one of the key factors behind the GBP/USD pair's momentum to the highest level since March 12.
Expectations of a dovish outlook from the Fed led to some follow-through slide in the US Treasury bond yields and undermined the USD demand. This coupled with the recent optimism over a sharp V-shaped recovery for the global economy further dented the greenback's safe-haven status.
A broad-based USD weakness lifted the pair to an intraday high level of 1.2786. However, slightly overbought conditions on short-term charts kept a lid on any further gains for the GBP/USD pair, rather led to a modest pullback to mid-1.2700s ahead of the latest FOMC policy update.
The Fed is scheduled to announce its decision at the end of a two-day meeting later this Wednesday and is expected to leave interest rates unchanged. Hence, the key focus will be on the accompanying rate statement and the Fed Chair's Jerome Powell's comments at the post-meeting press conference.
Investors will look for clues about the central bank's future policy path, which will influence the USD price dynamics and play a key role in determining the GBP/USD pair's near-term trajectory. Ahead of the key event risk, the release of the US CPI report might produce some trading opportunities.
Technical levels to watch