FX.co ★ GBP/USD

The GBP/USD pair briefly rose to around 1.3500 during the day before facing renewed selling pressure at the start of European trading on Wednesday, subsequently retreating to the lower end of its intraday trading range. Spot prices hovered around 1.3470-1.3465, slightly above the one-month low hit in the previous session, as market participants cautiously adjusted their positions ahead of the eagerly anticipated outcome of the two-day Federal Open Market Committee (FOMC) policy meeting. This decline underscores market caution as traders seek to assess the future direction of monetary policy from the world's most influential central bank. Factors behind the decline include widespread expectations that the Federal Reserve will maintain its tight monetary policy stance, bolstered by persistently high oil prices, inflation risks, and rising US Treasury yields, all of which provide strong support for the US dollar. Furthermore, escalating geopolitical tensions and security concerns in the Middle East continue to support capital flows into the dollar as a safe haven. Interestingly, these positive external factors, driven by the dollar, have completely overshadowed any positive factors within the UK, and the pound has remained fragile despite market expectations of strong UK consumer inflation data.

Technically, spot prices are currently consolidating near the 38.2% Fibonacci retracement level, attempting to hold above the key 200-day simple moving average at 1.3455 and the subsequent 50.0% Fibonacci retracement level at 1.3406. Technical market analysts consider the latter level a significant structural turning point; a break below it would provide a new technical signal for bearish traders. Meanwhile, fundamental momentum indicators suggest that a period of slight consolidation is more likely in the short term than a continuation of the overall trend. If the spot market continues to be pressured below the 200-day simple moving average at 1.3455, it could decline further to the 50% Fibonacci retracement level at 1.3406, and ultimately test the key 61.8% Fibonacci retracement level near 1.3343. A break below this lower support level would invalidate the current medium-term bullish market structure. Conversely, any attempt to rise will face immediate technical resistance at the 23.6% Fibonacci retracement level near 1.3548, while the recent high near 1.3675 will provide stronger structural resistance.