GBP/USD eases from tops, still well bid above mid-1.3600s
- A modest USD weakness assisted GBP/USD to gain some positive traction on Tuesday.
- The uptick lacked any strong follow-through and faltered just ahead of the 1.3700 mark.
- The market focus remains on the outcome of a two-day FOMC monetary policy meeting.
The GBP/USD pair trimmed a part of its intraday gains and was last seen hovering around the 1.3665-70 region during the early North American session, still up 0.10% for the day.
The risk-on impulse in the markets undermined demand for the safe-haven US dollar and assisted the GBP/USD pair to gain some positive traction on Tuesday. However, a combination of factors helped limit any deeper USD losses and kept a lid on any further gains for the major, rather prompted some selling in the vicinity of the 1.3700 mark.
Investors remain worried about contagion from China Evergrande's debt crisis, the fast-spreading Delta variant and a global economic slowdown. This, along with expectations for an imminent Fed taper announcement, acted as a tailwind for the greenback. This, in turn, warrants some caution before placing fresh bullish bets around the GBP/USD pair.
. Despite signs of easing inflationary pressures in the US, the incoming macro data pointed to the continuation of the economic recovery. This, in turn, has been fueling speculations that the Fed would begin rolling back its massive pandemic-era stimulus sooner rather than later. Hence, the focus remains on the outcome of a two-day FOMC meeting.
The Fed is scheduled to announce its monetary policy decision on Wednesday and investors will look for fresh clues about the likely timing of the tapering plan. Apart from this, the latest economic projections, especially the so-called dot plot, should assist investors to determine the next leg of a directional move for the greenback.
This will be followed by the Bank of England meeting on Thursday. The combination of key central bank events should provide some meaningful impetus to the GBP/USD pair during the latter part of this week. Nevertheless, the pair, so far, has managed to hold with modest daily gains and remains at the mercy of the sentiment surrounding the USD.
Technical levels to watch