Today it is all about the FOMC Statement and the press conference that follows. As such, all eyes are on the dollar and how it reacts to the Fed’s guidance. The price action seen in the GBP/USD pair is similar to the one seen in other dollar pairs, such as the EUR/USD or the AUD/USD.
More precisely, the dollar remains offered ahead of the Fed and, for the last couple of weeks, trended lower. Stocks made new all-time highs, as it was the case with the S&P500 index, on the back of the same weakness in the dollar.
Today’s event is particularly important for at least a couple of reasons. First, the Fed will likely keep its dovish bias, but the market is focusing more on the strength of the U.S. economy. Second, the GDP in the United States tomorrow may trigger a rally in the dollar, should it show much bigger growth than the market expects. In other words, the GDP has the power of overthrowing the Fed’s message today.
GBP/USD Technical Analysis
Bulls are still in control, and the market hovers around the 1.40 level. A move below support should trigger more weakness. Therefore, bears may want to sell on a break below the horizontal support, with a stop at the previous lower high and a take profit level that targets a risk-reward ratio bigger than 1:3.