GBP/USD hits fresh session tops, above mid-1.3000s ahead of the key FOMC decision

Having dropped to the 1.30 handle post-UK GDP release, the GBP/USD pair regained traction and has now jumped to fresh session tops beyond mid-1.3000s.

The pair eased a bit after the preliminary UK GDP figures showed that Britain’s economy grew by only 0.3% during the second quarter of 2017. This followed a sluggish 0.2% growth in the previous quarter and dampened expectations of any BOE rate hike action in the near future. 

   •  GBP/USD outlook appears neutral – Commerzbank

The dip, however, was bought into near the key 1.30 psychological mark and the up-move got an additional boost following the British finance minister Philip Hammond's comments that a transitional Brexit deal would help offer certainty to the business community.

Meanwhile, the US Dollar lacked any strong follow through buying interest as investors refrained from placing aggressive bets ahead of a major event risk - FOMC decision, and also seems to have collaborated to the pair's strong up-move over the past hour or so. 

With markets looking past today’s UK macro data, pre-FOMC repositioning trade might continue to act as an exclusive driver of the pair’s movement through early NA session. 

   •  FOMC: All eyes on announcement of balance sheet normalization - SocGen

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes, "an unexpectedly hawkish Fed could push the pair below the 1.3010 level, with the next support then being 1.2965, the 50% retracement of the mentioned rally, en route to the 1.2920 region, where the pair bottomed last week."

"To the upside, an steady advance beyond 1.3050 on another round of dollar's sell-off triggered by the Fed, could see the pair extending its advance up to 1.3125, the yearly high posted earlier this month" she added.