GBP/USD upside capped by 1.2600, data, FOMC eyed

The Sterling is posting marginal losses vs. the greenback at the beginning of the week, with GBP/USD sidelining below the 1.2600 handle.

GBP/USD appears supported near .12580

The pair is following the generalized absence of a clear direction in the global markets, navigating within a narrow range and with gains so far limited around the critical 1.2600 barrier.

Looking ahead, GBP should remain under pressure in light of the release of inflation figures for the month of November (Tuesday) and the labour market report (Wednesday), although the most salient event will be the FOMC meeting on Wednesday.

Recall that a 25 bp rate hike seems to be already fully priced in, although market participants will shift their attention to the future rate path and the potential steps by the Federal Reserve in the next year.

On the positioning side, GBP speculative shorts have been trimmed to the lowest level since early August, while net shorts have retreated from record levels during the week ended on December 6 and according to the latest CFTC report.

GBP/USD levels to consider

As of writing the pair is losing 0.02% at 1.2588 and a break below 1.2545 (low Dec.9) would expose 1.2530 (20-day sma) and then 1.2462 (55-day sma). On the flip side, the next hurdle aligns at 1.2706 (high Dec.8) followed by 1.2767 (100-day sma) and finally 1.2776 (high Dec.6).