GBP/USD holds above 100-day MA ahead of the Fed

• GBP/USD has found acceptance above the 100-day MA, having defended a key Fibonacci support on Friday.
• The pair could challenge recent highs if the Fed reaffirms gradual rate hike path.

The GBP/USD technicals have regained bullish bias ahead of the all-important Federal Reserve rate decision.

The currency pair closed above the 100-day moving average (MA) hurdle yesterday, having defended 1.3055 (38.2% Fib R of 1.2662/1.3299) on Friday. Further, the short-term MAs (10-day and 5-day) are trending north, indicating a bullish setup.  As a result, the stage looks set for a re-test of the recent high of 1.3299.

However, the bullish technical setup will likely fail if the Fed signals low tolerance for above-target inflation and willingness to push rates above the neutral level of 2.87 percent.

On the other hand, the GBP/USD may pick up a strong bid if the Fed reaffirms gradual rate hike path despite rising oil prices and sounds cautious about the impact that trade tensions could have on wages and capital spending.

The US central bank is set to raise rates by 25 basis points today and markets have already priced in two more rate hikes this year. At press time, the spot is trading at 1.3180.

• Read: Fed Preview: Market Moving Policy?

GBP/USD Technical Levels

Resistance: 1.3194 (resistance of previous day's high on the hourly chart), 1.3213 (July 26 high), 1.3299 (Sept. 20 high)

Support: 1.3143 (100-day MA), 1.3055 (38.2% Fib R of 1.2662/1.3299), .30 (psychological level)