At first glance, it looks like this GBPUSD rally has stalled.
But have buyers exhausted their resources or are market participants just hesitant in front of today’s Fed rate decision and statement?
Maybe a little of both?
I will say that major currency pairs such as GBPUSD tend to enter holding periods before significant events like that of FOMC.
That aside, here’s what we know so far…
As I mentioned on Sunday, the GBPUSD is holding above support at 1.3200 on a daily closing basis.
The level capped the late-January advance and has attracted bids so far this week.
However, the biggest takeaway from the chart below is the short-term trend line that extends from the year-to-date low.
That is a must-hold level for GBPUSD bulls in my opinion.
If it breaks down on a daily closing basis, there isn’t much to prevent the pound from revisiting the 1.2930/60 support area.
Don’t forget that I use New-York-close Forex charts so that each 24-hour session closes at 5 pm EST.
But just like I wrote in yesterday’s EURUSD post, we should have a few answers by the end of today’s session.
The Fed rate decision and statement at 2 pm EST should offer some clues about the likely future direction of GBPUSD.
Don’t forget too that there is a presser at 2:30 pm EST.
I still think the broader technicals for GBPUSD look constructive for a move higher.
That said, the immediate path forward is unclear.
The 1.3200 level is holding for now, but the bounce isn’t convincing enough for me.
I would, however, keep a close eye on trend line support from the January low.
Keeping prices above that level is critical if buyers intend to advance GBPUSD further.
If you’re looking for a U.S. dollar trade, though, you may be better off with EURUSD.
The pair is currently sitting at an inflection point that could decide the single currency’s trajectory over the next few months; perhaps even the entire year.
All eyes will be on how these markets react to today’s FOMC at 2 pm EST.