- GBP / USD is struggling to capitalize on its positive intraday move to fresh 32-month highs.
- Softer risk sentiment benefits the safe-haven USD and limits the pair’s rally.
- Investors expect some boost in US durable goods order data ahead of the FOMC decision.
The pair GBP / USD has returned initial gains to new 32-month highs at the start of the European session on Wednesday and has now fallen back to the lower end of its daily trading range. At the time of writing, the pair is trading near the 1.3730 region, virtually unchanged on the day.
The pair has built on the previous day’s strong rally of around 135 pips, from near the 1.3600 level, and has gained some traction during the first half of trading action on Wednesday. Momentum has pushed the GBP / USD pair to the highest level since May 2018, around the 1.3755-60 region, although it has lacked solid follow-up purchases.
Softer tone around equity markets benefits safe-haven US dollar, which in turn has been considered one of the key factors that has limited the rise of the GBP / USD pair. Investors follow concerned about the possible economic consequences of the increase in the number of coronavirus cases and the imposition of new restrictions to curb infections.
Apart of this, doubts about the timing and size of a new US fiscal stimulus packagecoupled with escalating tensions between the US and China in the South China Sea, have further clouded the mood. Meanwhile, risk sentiment has been evident by falling US Treasury yields, which could prevent USD bulls from opening new positions and help limit GBP / USD losses.
Investors might also prefer to stay on the sidelines before the last monetary policy decision of the FOMC, to be announced later during the American session on Wednesday. This makes it prudent to wait for a strong continuation sell before investors begin to position themselves for any significant corrective declines for the GBP / USD pair.
Before the key event, the focus will be on the release of US durable goods order data to get some momentum. Investors could also follow the signs of the broader market risk sentiment and developments around the coronavirus saga, which could influence USD price dynamics and generate some short-term opportunities.
GBP / USD technical levels
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